Challenging HMRC: making appeals out of time

United Kingdom

In S De Silva v HMRC [2021] UKUT 275 (TCC), the Upper Tribunal (UT) refused the taxpayer’s application for permission to make late income tax appeals, even though the grounds of appeal were potentially very strong.  The case serves as a useful reminder of the importance of making tax appeals within the time allowed and seeking specialist legal advice as soon as any potential tax dispute arises.  


If a taxpayer disagrees with a decision made by HMRC (such as a notice of assessment or enquiry closure notice), in most cases a challenge may be brought by way of appeal to the First-tier Tribunal (Tax Chamber) (FTT).  The appeal procedure will vary depending on the taxes involved:

  • For most direct taxes (e.g., income tax, capital gains tax and corporation tax), the taxpayer must first appeal to HMRC (usually within 30 days from the date of the decision).  HMRC will consider the merits of the appeal before issuing a final decision letter (although the taxpayer can choose to notify its appeal to the FTT before receiving a response).

  • For most indirect taxes (e.g., VAT), HMRC will issue a single decision letter and appeals are made directly to the FTT.

In either case, once a final decision letter has been issued by HMRC, the taxpayer will usually have 30 days to notify the appeal to the FTT (or otherwise choose to have that decision reviewed internally by HMRC).

As highlighted above, it is important to ensure that appeals are made within specified time limits.  Whilst late appeals can be made in certain circumstances, this requires HMRC’s consent (for direct tax cases) or, where such consent is not given (or for indirect tax cases), permission from the FTT.  For direct tax appeals made to HMRC, the relevant legislation provides that HMRC are only obliged to accept a late appeal if satisfied that there was a reasonable excuse for missing the deadline and that the request for making the late appeal was made without unreasonable delay after that excuse ended.  The FTT, on the other hand, is not limited by these statutory conditions.

FTT decision

In De Silva, the taxpayer had applied for permission to notify late appeals in respect of certain income tax assessments raised by HMRC.  The case involved a very significant delay, with the appeals notified to HMRC from 551 to 1338 days late.  HMRC objected to the application to make late appeals and the FTT subsequently refused permission.  The FTT found that there was little prejudice to the taxpayer and that the chances of the appeals ultimately succeeding ‘at first blush are dim’, despite the fact that the taxpayer had presented accounts and other evidence suggesting that there should be no overall income tax liability for the relevant periods (indeed, by the taxpayer’s calculations, a small refund was due).

The taxpayer appealed the FTT’s decision, arguing that the FTT had erred in law by failing to properly engage with the taxpayer’s case or explain its reasoning.

UT decision

The UT agreed with the taxpayer that the FTT’s decision had contained errors of law and therefore set that decision aside.  The UT then remade the decision, applying the well-known test set out in William Martland v HMRC [2018] UKUT 0178 (TCC).  The starting position is that permission should not be granted unless the taxpayer demonstrates that it should be.  The three-stage test in Martland then requires a balancing exercising, taking into account: (i) the length of the delay; (ii) the merits of any reasons for the delay; and (iii) the prejudice that would be caused to the respective parties by the grant or refusal of permission. 

In De Silva, the UT found that the significant delay in making the appeals (for ‘no good reason’) had left the taxpayer with a ‘high hurdle’ to overcome, and ultimately refused permission for the late appeals.  Despite the fact that the taxpayer considered it had strong grounds of appeal, the UT found that the case was not ‘overwhelmingly strong’ as it relied upon a detailed exploration of the evidence submitted (which had not yet taken place).  Moreover, although the taxpayer potentially faced bankruptcy if not allowed to pursue the appeals (i.e., causing him serious prejudice if the application were to be refused), the UT decided that this was not qualitatively different from any other taxpayer appealing a large tax assessment.


This case serves as a useful reminder of the importance of making tax appeals within the time allowed.  Taxpayers should be aware of the relevant appeal procedures, which will vary depending on the circumstances.  For example, no right of appeal exists against a charge to diverted profits tax until the end of a 15-month statutory review period.  The position is also different for judicial review proceedings, where a claim must be made promptly and, in any event, no later than three months after the grounds for making the claim first arose.

Given the strict time limits for commencing any form of tax litigation, it is critical to seek specialist legal advice as soon as any potential dispute arises.  

CMS Tax Disputes & Investigations

As part of the CMS global network with tax capability in over 70 offices, the CMS Tax Disputes & Investigations team is well-placed to advise on all forms of (direct and indirect) contentious tax matters.  Our dedicated specialists have a wealth of experience guiding both individuals and corporates (across a wide range of sectors) through all aspects of tax dispute prevention, management and resolution. 

Where a dispute cannot be resolved to the parties’ satisfaction, our team is well-placed to advise on pursuing the matter through the judicial system.  At CMS, we have experience litigating a wide range of (direct and indirect) tax matters at all levels from the tax tribunals to the Supreme Court.  Where applicable, we can work alongside any existing tax advisers or accountants to ensure that suitable preparations are made for litigation while discussions with HMRC continue.  

For more information, please contact a member of our team or click here.