“Better late than never” may be words to live by, but in litigation missing a deadline can have significant consequences. In the recent case of Medpro Healthcare Limited & Anor v HMRC [2025] UKUT 255 (TCC), the Upper Tribunal (the UT) looked at the principles to be applied by the First-tier Tribunal (the FTT) when deciding whether to give permission for a late appeal, and determined, in a rare split decision, that the UT decision in Martland v HMRC [2018] UKUT 178 (TCC) was clearly wrong. The UT held that no additional weight (over and above other relevant factors) should be given to the need for litigation to be conducted efficiently and at proportionate cost, or the need to enforce compliance with rules. In theory, this should mean an increase in late appeals accepted by the FTT, but it remains to be seen if this is what happens in practice. The UT in Medpro also decided that the FTT had not, in any case, applied the Martland test correctly and that it had failed to give adequate reasons for its decision in which it refused the taxpayers permission to bring their appeals out of time. 

Permission to appeal out of time

For both direct tax and VAT matters, an appeal must be made to the FTT within 30 days of the relevant notice/period. If a taxpayer wants to notify an appeal to the FTT after the time limit has expired, they will only be able to do so “if the tribunal gives permission.” This is the wording used in ss 49G(3) and 49H(3) of the Taxes Management Act 1970 for direct tax and in s83G(6) of the VAT Act 1994. 

The approach in Martland

The question of how the FTT should apply its discretion to give permission came before the UT in Martland. The UT looked to the Court of Appeal case of Denton & Ors v TH White Limited & Ors [2014] EWCA Civ 906, which considered the application of the latest version of Rule 3.9 of the Civil Procedure Rules (the CPR) dealing with relief from sanctions. Previously, CPR 3.9 had said the Court will consider all the circumstances and then listed nine factors this would include. The amended CPR 3.9 only listed two factors: “the need for litigation to be conducted efficiently and at proportionate cost” and “the need to enforce compliance with rules, practice directions and orders.” 

The Court of Appeal set out a three-stage approach to be applied to an application for relief from sanctions.

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

In relation to the third stage, the Court said that the two factors set out in CPR 3.9 “are of particular importance and should be given particular weight at the third stage when all the circumstances of the case are considered.”

In Martland the UT concluded that when the FTT is considering applications for permission to appeal out of time it could usefully follow the three-stage process set out in Denton. It went on to say that the balancing exercise at stage three “should take into account the particular importance of the need for litigation to be conducted efficiently and at proportionate cost, and for statutory time limits to be respected”, which are the two factors given particular importance by CPR 3.9.

Subsequent application of Martland

The approach in Martland has subsequently been applied in hundreds of applications for permission to appeal out of time in the FTT and has also been followed in the UT in a number of cases. This includes HMRC v Katib [2019] UKUT 189 (TCC), which dealt with the application of the test where there were failures by an advisor, and found that the FTT had made an error of law by “failing to acknowledge or give proper force to the position that, as a matter of principle, the need for statutory time limits to be respected was a matter of particular importance to the exercise of its discretion.” 

The Medpro decision

Although the FTT decision in Medpro was not published, the UT set out the structure of the decision and the relevant reasoning, which records that there were two penalty assessments and personal liability notices (PLNs) issued. Although Medpro Healthcare Limited appealed one of the penalty assessments in time, it was over five months late in appealing the second. The second Appellant, Mr Ruprai, appealed the related PLNs 70 days late and over five months late.

The FTT, as it was bound to do, identified the three-stage test set out in Martland and noted that in applying the test in relation to the first PLN, the delay of 70 days was “serious and significant” and the reason for the delay was “negligent”. It was explained that, although Mr Ruprai provided sick notes covering much of the relevant period, he had instructed an adviser to deal with HMRC and it was unacceptable that they should overlook the possibility of an appeal. The applications in relation to the second penalty and PLN were dismissed “for similar reasons.” 

The first ground of appeal was that the FTT had failed to apply the third stage of Martland and the second was, more specifically, that it did not consider whether the circumstances justified a departure from the general rule in Katib. The third ground was that the reasoning in the judgment was insufficient and, finally, the fourth ground was (as the UT put it) a “bold attack” on Katib and Martland as it was said that “an application permission to bring a late appeal to the FTT is not analogous with the question of whether a litigant's case should be struck out for breach of an "unless" order".

As the UT noted, the first three grounds were closely related. The UT identified that “it is plain that a decision can fall very far short of what is ideal, and yet still enable its reasoned basis to be discerned.” Nevertheless, despite the low threshold, the UT were not satisfied that the decision contained adequate reasons and, as such, the UT were unable to be satisfied as to whether the FTT had carried out the balancing exercise correctly and if they considered whether to disapply the general rule in Katib. However, the real surprise in the judgment was that the Appellants’ “bold attack” was successful, and it was held that it was not permissible for the FTT to follow the approach in Denton and place particular weight on the factors set out in CPR 3.9. 

The correct approach

Although a UT decision is not binding on the UT itself, it is unusual for the UT not to follow a previous decision. This is even more unexpected when the previous decision has been approved in multiple other UT decisions and has been applied as frequently as the UT decision in Martland. 

In order to depart from a previous decision, the UT will need to be “convinced” that it is wrong. The high threshold for the test may also explain why there was another rare occurrence in Medpro – a split decision. 

Both judges were agreed that the Martland approach was clearly apt for determining whether extensions of time should be granted under s 83G(6) VATA 1994. However, the question was one of statutory construction, and the panel were divided as to whether Martland had elevated the two CPR 3.9 factors in a manner that the statute did not permit. 

Marcus Smith J, with the casting vote, did not consider this to be permissible as the wording in s 83G(6) VATA 1994 did not track the new version of CPR 3.9, which allowed the Court of Appeal to take the approach they did in Denton. As such, he determined that, although the three-stage approach was “unimpeachable”, the fetter the UT had placed on the FTT as to the weight to be given to particular factors could not be justified and was “clearly wrong”.

Where to from here?

Although it is significant for the UT to depart from such a widely followed decision, there is some question as to how much of a difference this will make in practice. Certainly, by emphasising the importance of litigation being conducted efficiently and enforcing compliance with rules, over factors set out under the previous CPR 3.9 such as “whether the failure to comply was intentional” or “whether the failure to comply was caused by the party or his legal representative”, the changes to CPR 3.9 were designed to make it harder to obtain relief from sanctions. Therefore, by removing the particular weight to be placed on these factors in relation to late appeals, it should be the case that it is easier to obtain the FTT’s permission for an extension of time. 

However, even if the efficiency of litigation and the adherence to rules are not factors to be given additional weight, they are still factors that need to be considered, and it remains the case that the courts and tribunals now take a stricter approach to compliance with rules. In particular, the Denton approach will continue to apply to relief from sanctions in relation to case management decisions, and it seems unlikely that, in practice, the FTT is going to exercise its discretion in a significantly different manner when dealing with late appeals. 

Further, there is, of course, the possibility of an appeal. With a split decision on a principle of importance, an application for permission to appeal has a good chance of success, and HMRC are likely to be keen to avoid the risk of a softening in the approach to late appeals. It may, therefore, be early days for this late appeal issue.