Tax Tribunal Denies HMRC’s Extension of Time to Serve Notice of Appeal

In the recent case of HMRC v McCarthy & Stone (Developments Limited)  the Upper Tribunal (Tax and Chancery Chambers) (“UT”) refused HMRC’s application for an extension of time to serve it’s Notice of Appeal.  The UT’s decision was heavily influenced by the Rule 3.9 of the Civil Procedure Rules 1998 (“CPR”) and the Jackson Reforms despite the fact that the CPR are only persuasive (not applicable) to tax tribunals.


HMRC’s Application for Extension of Time to Serve Notice of Appeal

McCarthy and Stone (Developments Limited) (“McCarthy and Stone”) built and sold retirement accommodations consisting of separate apartments with communal areas. They also furnished communal areas and deducted the input tax incurred.

HMRC decided that the input tax was not deductible and McCarthy and Stone appealed to the First Tier Tribunal (“FTT”). The FTT allowed the appeal on the basis that there was a single zero rated supply and therefore the input tax on the furnished communal areas was deductible for tax purposes.

On 8 February 2013, HMRC applied to the FTT for permission to appeal to the UT. In a decision dated 4 April 2013, the FTT granted HMRC permission to appeal.

Rule 23(2) of the Tribunal Procedure (Upper Tribunal) Rules 2008 states that an Appellant must provide a Notice of Appeal to the UT within one month from the date on which the FTT sent the decision granting the Appellant permission to appeal. In breach of Rule 23(2) HMRC served their Notice of Appeal to UT on 1 July 2013, 56 days late.

As a result, and in accordance with Rule 23(5) of the Tribunal Procedure (Upper Tribunal) Rules 2008, HMRC’s Notice of Appeal must include a request for extension of time and it must state the reasons why the Notice of Appeal was not provided in time. Unless the UT extends time for the Notice of Appeal, the UT must not admit the Notice of Appeal.

Application for Relief from Sanctions and the Jackson Report: Review of Civil Litigation Costs

From April 2013, under CPR 3.9, when considering an application for relief of any sanctions the court will consider all the circumstances of the case including the need for a) for litigation to be conducted efficiently and at proportionate costs and b) to enforce compliance with rules, practice directions and orders.

The leading authority is Mitchell MP v News Group Newspapers Limited [2013] EWCA Civ 1537. In this case, the Court of Appeal held that relief from sanctions should be granted only where the breach is “trivial” and there has been a failure of “form rather than substance.”

Upper Tier Tax Tribunal’s Decision

Judge Sinfield refused HMRC’s application for extension of time and HMRC’s notice of appeal was therefore not admitted. The Judge held that whilst the CPR does not apply in tax tribunals there was no reason for the UT to adopt a different, or more relaxed approach, to compliance with rules, directions and orders, than the courts do under the CPR.

The Judge’s decision was heavily influenced by ruling in Mitchell stating that HMRC’s breach could not be seen as “trivial” and  that HMRC were unable to provide a good reason as to why they had not complied with the relevant time limit to serve their Notice of Appeal.

Judge Sinfield concluded:

” I can see no reason why time limits in the UT Rules should be enforced any less rigidly than time limits in the CPR. In my view, the reasons given by the Court of Appeal in Mitchell for a stricter approach to time limits  are as applicable to proceedings in the UT as to proceedings in courts which are subject to the CPR.”


The decision in this case demonstrates that there is a greater need to ensure that tax appeals are conducted efficiently and non-compliance with rules will not be tolerated, unless there are exceptional circumstances.

Although the CPR do not apply to the tax tribunal it is clear from this decision that (to a large extent) tribunal judges are willing to consider and be persuaded by the CPR if it is appropriate to do so.

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