Judgment summary
This decision concerns applications by Tomi's Restaurant Limited and Mr Richard Odiase for permission to bring out-of-time appeals against Discovery Assessments to corporation tax, including s. 455 CTA 2010 loans to participators charges, and against Penalty Assessments under Sch. 24 FA 2007, together with a personal liability notice issued to Mr Odiase (1)-(2).
The deadline for appealing the Discovery Assessments was 26 August 2024, but the appeal was lodged on 7 October 2025, a delay of 13 months and 12 days (3). The deadline for appealing the Penalty Assessments was 6 January 2025, and the appeal was also lodged on 7 October 2025, a delay of 9 months and 2 days (4).
Applying the three-stage Martland test, the Tribunal found the delays serious and significant (16)-(17), found that the default arose from a genuine misunderstanding by the Appellants and their accountant, Isaac & Company, compounded by confusing correspondence from HMRC, but concluded this did not amount to a good reason for the delay (27). Weighing all circumstances, including prejudice to both parties, the apparent merits of the proposed appeals, and the importance of respecting statutory time limits, the Tribunal dismissed the application (43).
Background
Tomi's Restaurant Ltd was issued with Discovery Assessments to corporation tax under para. 41 Sch. 18 FA 1998 for accounting periods ending 31 March 2012 to 31 March 2020, totalling £285,034.93, and further assessments in respect of loans to participators charges under s. 455 CTA 2010 totalling £196,364.11 (1). Penalty Assessments under Sch. 24 FA 2007 in respect of inaccuracies in the company's CT returns totalled £313,547.37 (1). Mr Odiase was issued a personal liability notice for 50% of the penalty sum, £156,773.68, on 11 July 2024 (2).
The view of the matter letter concerning the Discovery Assessments was dated 26 July 2024, giving a deadline of 26 August 2024, and the view of the matter letter concerning the Penalty Assessments was dated 6 December 2024, giving a deadline of 6 January 2025 (3)-(4). Both appeals were lodged on 7 October 2025 (3)-(4).
The Appellants relied on ongoing correspondence and telephone contact with an HMRC officer, Ms Wang, between the view of the matter letters and the eventual appeal, arguing they believed the matter remained open for review or settlement (18)-(21). A winding-up petition subsequently came to their attention, and solicitors were instructed on or about 20 August 2025, with the appeals lodged around 48 days later, on 7 October 2025 (24).
Core dispute
The issue for the Tribunal was whether there was a good reason for the Appellants' failure to appeal within the statutory time limits and, if not, whether, evaluating all the circumstances, permission should nevertheless be granted for the appeals to proceed out of time (13). It was common ground that the delays were serious and significant (13), (17).
The Appellants argued that they and their accountant genuinely believed ongoing exchanges with HMRC, including correspondence from Ms Wang referring to being 'not in a position to revise' her decision, meant the matter remained open, and that HMRC's conduct contributed to their misunderstanding of the correct statutory routes (18)-(21). HMRC argued that a mistake by a representative is not a good reason for delay, relying on MPTL Ltd v HMRC and HMRC v Hafeez Katib, and that the merits of the proposed appeals were weak (10), (29).
Court findings
Applying Martland v HMRC [2018] UKUT 178 (TCC), the Tribunal first found the delays of over 13 months (Discovery Assessments) and over 9 months (Penalty Assessments) to be serious and significant, a point conceded by the Appellants (15)-(17).
On the reasons for default, the Tribunal accepted that Tomi's Restaurant, Mr Odiase and Isaac & Company genuinely, but mistakenly, believed they were engaged in an ongoing process with HMRC capable of leading to a different outcome, and did not understand the formal statutory routes of review or appeal (18). The Tribunal found it surprising that a qualified, experienced accountant did not appreciate the distinction between correspondence with the decision-maker and the formal statutory routes, and applied the principle in Katib that failures by a litigant's adviser are generally treated as failures by the litigant (19).
The Tribunal found that some of HMRC officer Ms Wang's correspondence, including her statements on 19 August 2024 and 18 September 2024 that she was 'not in a position to revise' her decision, was not expressed with clarity and was liable to send a confusing message (20)-(21). However, the Tribunal did not accept that the letter of 20 November 2024, which set out three options including 'settling the matter with Ms Wang directly', supported continuing settlement negotiations about the correctness of the assessments (22). The formal view of the matter letters of 26 July 2024 and 6 December 2024 were found to be sufficiently clear as to the available routes and time limits (23), (38).
The Tribunal also weighed the further delay of about 48 days after solicitors were instructed on or about 20 August 2025 before the appeals were lodged on 7 October 2025, treating this as a significant factor against the Appellants (24). Overall, the Tribunal found the default was caused by genuine misunderstanding, compounded by confusing HMRC correspondence, but that this did not amount to a good reason for the delay (27).
In its evaluation of all the circumstances, the Tribunal found it could not conclude, without a mini-trial, that the proposed appeals were very strong or very weak, and proceeded on the basis they had reasonable prospects of success, a factor carrying some but not decisive weight in favour of permission (29)-(30). It found HMRC would suffer real, though reduced, prejudice from having to deal with substantially late appeals, given continuing engagement between the parties (31), (33). It found the Appellants would suffer very substantial prejudice if permission were refused, given liabilities of around £800,000 and the risk of the company being wound up (34)-(35). The Tribunal gave particular weight, as required by Martland, to the need for litigation to be conducted efficiently and for statutory time limits to be respected (39).
Outcome
The Tribunal concluded that the balance came down against granting permission, notwithstanding the serious consequences for Tomi's Restaurant and Mr Odiase and HMRC's contribution to the confusion, because the delays were lengthy, the statutory routes were clearly explained in the formal letters, and no good reason had been established for the failure to act in time (43). The application for permission to bring the appeals out of time was dismissed (43).
Major issues / areas of contention
- Whether the delays in appealing the Discovery Assessments (13 months and 12 days) and Penalty Assessments (9 months and 2 days) were serious and significant.
- Whether the Appellants had a good reason for the default, given their belief that ongoing correspondence with HMRC constituted a live review or settlement process.
- Whether failures by the Appellants' accountant, Isaac & Company, should be treated as failures by the Appellants themselves, per HMRC v Hafeez Katib.
- Whether correspondence from HMRC officer Ms Wang after the view of the matter letters was sufficiently clear or contributed to the Appellants' misunderstanding of the correct statutory appeal routes.
- Whether the further delay of about 48 days after solicitors were instructed weighed against granting permission.
- The weight to be given to the apparent merits of the proposed substantive appeals without conducting a mini-trial.
- The balance of prejudice to HMRC and to the Appellants if permission were granted or refused.
- The weight to be given to the need for statutory time limits to be respected and for litigation to be conducted efficiently, per Martland v HMRC.