Late expectations – taxpayers succeed in their application to appeal out of time
The 30 day time limit, contained in section 31A Taxes Management Act 1970 ('TMA 1970'), for giving notice of appeal against an amendment of a self-assessment contained in a closure notice is well known to tax practitioners
…but there are invariably cases where this time limit is missed, especially when taxpayers do not have professional advisers dealing with their affairs. In such circumstances, if HMRC do not agree to notice being given out of time, taxpayers can apply to the First-tier Tribunal ('FTT'), pursuant to section 49 TMA 1970, for permission to appeal out of time.
Some guidance can be gleaned as to the circumstances in which the FTT will grant permission to taxpayers for the submission of late notices of appeal from the cases that have come before the FTT on this issue.1 In deciding whether to exercise its discretion and permit a late appeal, the FTT has to balance the need for finality for HMRC and the harsh consequences for a taxpayer who will otherwise be denied an opportunity to pursue his appeal. The most recent case on late appeals to come before the FTT is Advance Consulting (a partnership) v HMRC  UKFTT 567 (TC).
In this case, the appellants sought an extension of time in which to appeal against amendments contained in closure notices issued on 15 December 2008. The 30 day time limit to appeal the closure notices expired in January 2009. A period in excess of 3 years had therefore elapsed since the expiration of this 30 day time limit and the date of the application to the FTT requesting permission to make late appeals.
Section 31A TMA 1970 sets a time limit for giving a notice of appeal to HMRC of 30 days from the date of the closure notice. It also provides that the notice of appeal must be in writing and must be given to the relevant officer (usually the officer who issued the closure notice).
Under section 49 TMA 1970, a taxpayer may bring an appeal out of time. Section 49 provides:
“49(1) This section applies in a case where—
(a) notice of appeal may be given to HMRC, but
(b) no notice is given before the relevant time limit.
(2) Notice may be given after the relevant time limit if—
(a) HMRC agree, or
(b) where HMRC do not agree, the tribunal gives permission.
(3) If the following conditions are met, HMRC shall agree to notice being given after the relevant time limit.
(4) Condition A is that the appellant has made a request in writing to HMRC to agree to the notice being given.
(5) Condition B is that HMRC are satisfied that there was reasonable excuse for not giving the notice before the relevant time limit.
(6) Condition C is that HMRC are satisfied that the request under subsection (4) was made without unreasonable delay after the reasonable excuse ceased.
(7) If a request of the kind referred to in subsection (4) is made, HMRC must notify the appellant whether or not HMRC agree to the appellant giving notice of appeal after the relevant time limit.
(8) In this section “relevant time limit”, in relation to notice of appeal, means the time before which the notice is to be given (but for this section).”
Jurisdiction of the FTT
HMRC accepted that section 49 TMA 1970 provides the FTT with a general discretion as to whether to grant permission for the giving of late notice of appeal and is not restricted to the limited grounds upon which HMRC must agree to a late appeal under section 49. However, at the hearing, HMRC took the preliminary point that in order to make an application under section 49, the taxpayer must have given written notice of appeal to HMRC pursuant to section 31A TMA 1970. The FTT rejected this argument as Condition A in section 49 makes it clear that the making of a request to HMRC to agree that a late notice of appeal may be made is a separate step to the giving of a notice of appeal under section 31A. Whilst there must be a request to HMRC for it to agree to a late appeal, the jurisdiction of the FTT to give permission under section 49(2)(b) arises once HMRC has not agreed to a late appeal.
The FTT's decision
The appellants' claimed that they had not received the closure notices dated 15 December 2008, and had not received other correspondence from HMRC prior to the issue of the closure notices requiring certain documentation for the purposes of the enquiry. Having heard "credible and reliable" evidence from the appellants' accountants that they also had not received related correspondence from HMRC, the FTT found as a fact that this was indeed the case.
The FTT accepted that HMRC have a legitimate interest in the finality of assessments and that there comes a time when they are entitled to assume that an adjustment arising from a closure notice is final. Although there had been a delay of some 3 years by the appellants, HMRC were unable to identify any prejudice which they would suffer if the appeals were allowed to go forward and the appellants had a "reasonable prospect of succeeding" if the appeals proceeded. In the circumstances, the FTT determined the application in the appellants' favour and granted permission for late appeals.
Although each case will of course depend upon its own facts, and the hurdles involved in obtaining permission to appeal out of time should not be under-estimated, a taxpayer who has not appealed in time should always consider whether he should submit an application to the FTT, under section 49 TMA 1970, for permission to bring his appeal out of time. Whilst careful preparation for such an application will be required, this case is a welcome reminder that in appropriate circumstances the FTT will be prepared to grant permission to taxpayers to bring late appeals.
1 See, for example, Former North Wiltshire District Council v HMRC  UKFTT 229 (TC).