We recently wrote about the case of Medpro Healthcare Limited & Anor v HMRC [2025] UKUT 255 (TCC), which held (in a rare split decision) that the earlier Upper Tribunal (UT) decision in Martland v HMRC [2018] UKUT 178 (TCC) was “clearly wrong” in its determination of the principles to be applied by the First-tier Tribunal (FTT), when deciding whether to give permission for a late appeal. The UT in Medpro found that it was not permissible for the FTT to place particular weight, over and above other relevant factors, on the need for litigation to be conducted efficiently and at proportionate cost or the need to enforce compliance with rules.

In our previous article, we noted that further clarity would be needed in light of the two conflicting UT decisions, and we also queried whether a change in approach to the weighting of factors would make much of a difference in practice to the success of applications for permission to appeal out of time. Just a couple of months later, this issue has already made its way back to the UT in Tajinder Pawar v The Commissioners for HMRC [2025] UKUT 00309 (TCC), and there has since been an interesting decision from the FTT in Lands Luo Ltd v HMRC [2025] UKFTT 1207 (TC).

Brief backdrop: the Medpro decision

Prior to Medpro, the FTT was bound by Martland in determining whether to give permission for a late appeal. The UT in Martland had decided that the FTT could usefully follow the three-stage approach set out in the Court of Appeal case of Denton & Ors v TH White Limited & Ors [2014] EWCA Civ 906, which had been applied to an application for relief from sanctions under Rule 3.9 of the Civil Procedure Rules (the CPR). These stages are: 

1. identify and assess the seriousness and significance of the "failure to comply with any rule, practice direction or court order";
2. consider why the default occurred; and
3. evaluate all the circumstances of the case, so as to enable the court to deal justly with the application. 

At the third stage, the Court of Appeal in Denton said that “the need for litigation to be conducted efficiently and at proportionate cost” and “the need to enforce compliance with rules, practice directions and orders” were of special importance and should be given particular weight, as they were the two factors expressly mentioned in CPR 3.9.

Although CPR 3.9 does not apply to the FTT, the UT in Martland determined that these factors should also be given key importance. This determination was the basis for the “attack” on Martland by Medpro Healthcare Limited. Although the UT is not bound by its own decisions, it will only depart from a prior decision if it is “clearly wrong”. It is notable that although Medpro did indeed depart from Martland on the basis it was “clearly wrong” to elevate the two CPR 3.9 factors (in a manner not permitted by the relevant section in the VAT Act 1994), the judges were not actually agreed on this point. 

Leaving that to one side, the question then remained: how would the conflicting decisions be dealt with, and what effect would this change have in practice?

The Pawar case: applying the new approach

Pawar was heard in the UT before the Medpro decision was published. The appeal was against the FTT’s refusal to grant Mr Pawar permission to appeal a personal liability notice (PLN) of £874,238, three years and two months out of time. Mr Pawar maintained that the delay was owing to his understanding that a settlement had been reached in principle, and his reliance on advisers who did not advise him of the need to appeal. However, the FTT found that the reason for the delay was Mr Pawar’s “wilful disregard (in the hope that the matter would simply "go away" if it were ignored), inattention, or an assumption that it would all be sorted out satisfactorily without further involvement on his part.” 

In considering all the circumstances of the case, the FTT recorded Mr Pawar’s submissions that HMRC had recognised the amount of the PLN was excessive, that it would force him into bankruptcy, and that there was no prejudice to HMRC in addressing the appeal as he was in time to appeal another PLN on the same facts. The FTT looked at the prejudice to both parties and noted that, although the prejudice to Mr Pawar would be “very great”, that is a common feature of such cases. In relation to HMRC’s prejudice, it was found that HMRC would have to re-examine matters they thought were closed, and that the potential appeal of another PLN relating to the same matters did not carry significant weight. In accordance with Martland (which was binding authority at the time), the FTT took account of the particular importance of the need for litigation to be conducted efficiently and at proportionate cost, and for statutory time limits to be respected, with the result that the balancing exercise militated against giving permission. 

As Medpro had not been determined when permission to appeal was granted, Mr Pawar’s grounds did not refer to that case. Instead, he argued that the FTT had failed to consider: 

1. the merits of the claim and corrective action;
2. Mr Pawar’s threat of bankruptcy; and
3. the proper scope of the rule in HMRC v Katib [2019] UKUT 0189 (TCC), regarding a litigant being held responsible for their adviser’s failings. 

However, by the time of the hearing, Mr Pawar was aware that Medpro was being heard and both parties referred to it in their submissions. Following the release of Medpro, the parties provided further written submissions on the case, and Mr Pawar was given permission to include an additional ground of appeal that the FTT had wrongly followed the Martland approach and placed undue weight on the need to comply with statutory time limits. 

The UT dismissed the first three grounds of appeal which, if it were not for Medpro, would have been the end of the matter. In determining the final ground of appeal, the UT had to decide how to deal with the conflicting decisions of Medpro and Martland and noted that it was “unable to conclude that either decision is clearly wrong or, conversely, clearly right”. It was also mentioned that HMRC was contemplating an appeal, but that the decision could not be delayed for that reason. In the circumstances, the UT decided to follow Medpro on the basis that it was the more recent decision, and that it expressly considered the correctness of Martland. As a result, the UT found that the FTT had made a material error of law; if the FTT had not given particular importance to the need for statutory time limits, it might have made a difference to the outcome. The UT, therefore, set the FTT’s decision aside and re-made the decision using the three-stage approach in Martland, but without giving special weight to the two CPR 3.9 factors.

The UT agreed with the FTT on the reason for Mr Pawar’s delay and went on to consider all the relevant factors including the strength of the appeal, the prejudice to the parties (with reference to the risk that enforcement of the PLN might drive the Appellant into bankruptcy), and the unjustified delay. Having undertaken this process, the UT found that even "without according particular importance to the need for statutory time limits to be respected, …. the prejudice to the Appellant of not being allowed to pursue an appeal as at the date of his application … is not sufficiently great as to outweigh more than three years' unjustified delay in making the application.” The UT, therefore, dismissed the appeal. 

Lands Luo in the FTT

Until the case of Lands Luo, the FTT had taken an approach to the conflicting authorities similar to that of the UT; in both Di Lellio v HMRC [2025] UKFTT 1071 and Wolf & Whistle Ltd v HMRC [2025] UKFTT 1187 (TC) the FTT applied Medpro as the more recent authority. However, in Lands Luo the Senior President of Tribunals, Lord Justice Dingemans joined the FTT panel, which expressed a clear preference for the Martland approach and decided not to follow Medpro, but to use it as a “cross-check”. 

The FTT in Lands Luo looked to the Court of Appeal judgment in BPP Holdings Limited v HMRC [2016] EWCA Civ 121, which was subsequently affirmed by the Supreme Court. In BPP, the FTT had applied by analogy the guidance in the case law on Rule 3.9 to its discretion as to whether to debar HMRC from proceedings for their failure to comply with orders. When BPP came to the Court of Appeal, the Court noted that there were two conflicting UT decisions as to whether the guidance in the Rule 3.9 cases should be followed, in the absence of Rule 3.9 being incorporated into the FTT rules. It then determined that there was nothing in the wording of the overriding objective in the FTT rules that was inconsistent with the general policy in the Rule 3.9 case law, and there was no justification for the FTT taking a more relaxed approach to compliance with rules and directions. As such, the FTT’s approach was held to be appropriate.

Although Medpro referred to BPP, the UT did not address the analysis as to whether the guidance in the Rule 3.9 case law could apply by analogy to the FTT proceedings. It was emphasised in Medpro that the question was one of statutory construction, and that the FTT was not exercising case management powers in the conduct of an extant appeal (as was the case in BPP). In Lands Luo the FTT identified this difference, but noted that it considered the Court of Appeal’s reasoning in BPP was a statement of general application to the exercise of such discretions by the FTT. On this basis, the FTT decided it was appropriate to follow Martland and found that, despite the serious and significant delay of 292 days, in balancing all the relevant factors, permission to appeal out of time should be given. The FTT noted that, as they had given permission on the stricter Martland test (giving additional weight to the need for litigation to be conducted efficiently and at proportionate cost and the need to enforce compliance with rules, practice directions and orders), they would have done so under the Medpro test. 

Where does that leave us?

Prior to the Lands Luo decision it seemed that the FTT and UT alike would simply follow Medpro (as a newer case that expressly considered Martland), until the time that the Court of Appeal was able to weigh in on the issue. However, the impact of Lands Luo has changed the approach in the FTT. It has not shifted the FTT to come down in favour of Martland but, rather, subsequent cases have referred to the decision and then applied both tests, confirming that the outcome would be the same regardless. 

Although, in theory, the effect of Medpro ought to be that more late appeals are allowed, we queried in our previous article whether this would actually be the case. It is, therefore, interesting to note that there is yet to be a decision where the FTT has identified that the tests would produce different results. This is, of course, the easiest way forward for the FTT, as it means it does not need to decide whether to follow Medpro or Martland.

With the large number of late appeal applications that the FTT receives, it may be that we will soon see a case in which the FTT finds that they would allow an application under Medpro but not Martland - perhaps where there is a short delay, or where there is a compelling explanation that might not otherwise have been considered sufficient to balance a longer delay. However, ultimately, the conflicting case law means that we need to hear from the Court of Appeal in order to obtain proper clarity on this issue.