A recent decision of the First-tier Tribunal (FTT) refusing permission to make late appeals against denials of 16 companies’ claims for tax relief highlights the dangers of failing to appeal decisions made by HM Revenue and Customs (HMRC) in time.

A number of companies within the same group which were engaged in the conversion and development of properties had received Refusal Decision Notices (RDNs) in respect of claims for relief under the Income Tax (Construction Industry Scheme) Regulations 2005. While 18 of the companies’ appeals were made within the 30-day time limit, those in respect of 16 companies were not. The companies sought permission to appeal late. Considering one of the companies’ appeals, the FTT noted that the issues were the same in all 16 cases.

HMRC’s position was that it had issued RDNs in respect of all the group companies in the same manner. Many of the companies had lodged appeals in time, so the company could and should have done so too. If the RDN had not been received when it was first issued, the company should have appealed when it was sent a copy, rather than waiting a further two months and five days. HMRC acknowledged that refusing the late appeal would prevent the company from challenging the RDN, but argued that that was not enough to warrant a late appeal.

The company argued that the fact that a number of RDNs had been received and acted on showed that it would have appealed the RDN on time if it had received it. Following receipt of the re-sent RDN, it said it had submitted the appeal at the earliest possible opportunity. The group’s accountants had prioritised appeals that were not yet late in order to meet deadlines where still possible, meaning those that were already late became later.

Following the three-stage test set out in Martland v HM Revenue and Customs, the FTT noted that the delay was significant, the appeal having been made 124 days late. The reason for the first 58 days of the delay was that the RDN had not been received, and the reason for the remaining 66 days’ delay was that the accountants had been dealing with a large number of notices and appeals relating to various group companies. The prejudice to the company of refusing permission to appeal would be the loss of the opportunity to argue its case and, potentially, a financial liability that could otherwise have been avoided. The FTT acknowledged that this was significant.

Refusing permission to appeal late, however, the FTT concluded that the reasons given for the delay were insufficient to justify its length and significance and to override the importance of observing the statutory deadlines, notwithstanding the inevitable prejudice to the company of permission being refused.