In HMRC v NT ADA Ltd [2018] UKUT 59, the Upper Tribunal (UT) has found that a penalty notice issued under section 67, Value Added Tax Act 1994 (VATA) could be valid even though it failed to refer to the taxpayer’s entitlement to request a review under section 83A, VATA.


The underlying dispute concerned whether NT ADA Ltd, a Jersey company, was within the scope of UK VAT in respect of supplies made to UK-based customers. HMRC made three decisions against the taxpayer, one of which was a penalty of over £200,000 imposed under section 67, VATA, for failure to register.

HMRC’s letter notifying the penalty contained the following statement: “If you disagree with this decision you can ask for a review by an independent HMRC officer within 30 days of this letter. Or you can appeal to the Tribunal Service within 30 days of this letter. If you opt for a review, you can still appeal to the tribunal after the review has finished.”

When the matter came before the First-tier Tribunal (FTT), the taxpayer argued that HMRC had failed to comply with the requirement in section 83A, VATA, to offer a review and the FTT therefore had no jurisdiction to consider the penalty notice. The FTT agreed with the taxpayer and struck out the penalty appeal. In the view of the FTT, HMRC had failed to offer a review and it was not sufficient to simply inform the taxpayer that it could ask for a review. This invalidated HMRC’s decision to impose a penalty.

HMRC appealed to the UT.

UT decision

The appeal was allowed. The UT found that whilst it was clear that Parliament intended that a person receiving an appealable decision should be offered a review, the legislation was silent on the consequences of HMRC failing to do so. There was nothing in section 83A which supported the proposition that a failure to offer a review rendered an assessment invalid, invalidly notified, or not capable of appeal. Indeed, in the view of the UT, the offer of a review was simply something that must be made alongside the assessment but was separate to it. Failure to offer a review did not invalidate the related decision and therefore did not preclude an appeal against the decision.

The UT considered that any failure on the part of HMRC to comply with its obligations to offer a review would be relevant and likely to influence the FTT when deciding whether to exercise its discretion to admit a late appeal. The taxpayer would also have the option of making a challenge by way of judicial review.

In any event, the UT considered that the notification by HMRC of the option for a review was sufficient to satisfy the conditions in section 83A.


This decision highlights an interesting difference between VATA and the Taxes Management Act 1970 (TMA) when it comes to the required contents of a penalty notice. Whilst the failure to offer a review may invalidate a penalty issued under TMA, it would appear that this is not be the case in relation to a penalty issued under VATA.

A copy of the decision is available to view here.