The approach to procedural errors, such as the late filing of appeals and non-compliance with directions, has been the subject of a number of decisions over the past 18 months. The various judicial interpretations, in particular, in Denton v White1 and Data Select v HMRC 2, have resulted in a period of uncertainty for taxpayers. However, in the recent case of Citipost Mail v HMRC3 the First-tier Tribunal (FTT) has provided some welcome guidance on the correct approach.


Citipost Mail Limited (Citipost) specialises in the delivery of paper based products and packets. From September 2009 to March 2012, it delivered packages sourced in Jersey to the UK on the basis that the deliveries fell within the Low Value Bulk Imports (LVBI) approval (available at the relevant time).

In 2011, HMRC became concerned with the way Citipost was operating the LVBI and on 2 November 2011 issued a “post clearance demand notice” (PCDN) for unpaid import VAT (the First PCDN). Later, in January 2013, HMRC issued a penalty in relation to the First PCDN. This was followed by two further PCDNs, each dated 23 January 2013.

Citipost requested a formal review of the two later PCDNs and the penalty, which were upheld. In its decision, HMRC confirmed that the First PCDN had not been included in the review because it was out of time. Citipost appealed this decision.

The matter recently came before the FTT for preliminary hearing to determine whether Citipost should be allowed to make a late appeal against the First PCDN. The recent decision deals only with that matter.

FTT’s decision

The FTT considered the following three issues:

  • whether the First PCDN had been issued by HMRC and/or received by Citipost
  • had Citipost decided not to appeal the First PCDN and
  • should Citipost be permitted to make a late appeal in relation to the First PCDN.

Whether the First PCDN had been issued and received

Taking into account all the circumstances, in particular, reference to the First PCDN in correspondence and the completion of the form (address, date for payment etc) the FTT had no difficulty in finding that the First PCDN had been properly issued.

With regard to whether the First PCDN was received, the FTT considered the evidence and found that it had. Factors the FTT took into account included correspondence between the parties in which Citipost had not identified that the First PCDN had not been received, but requesting copies of the schedule with the calculations. In addition, a witness who had initially stated that the First PCDN had been received changed his evidence before the hearing.

Had Citipost decided not to appeal the First PCDN

Citipost submitted that it remained in negotiations with HMRC and therefore did not request a review of the First PCDN, or commence an appeal. However, the FTT concluded that such a submission was contrary to the evidence which indicated there was not a continuing dialogue but rather that Citipost had intended to comply with HMRC’s requirements.

Should Citipost be granted permission to make a late appeal in relation to the First PCDN The main issue for determination by the FTT concerned whether to allow Citipost to make a late appeal.

In reaching a conclusion on this point, the FTT considered whether it should follow the “three stage” approach in Denton where “all the circumstances” are not considered until the third stage; or follow Data Select, which requires only that all the circumstances be considered and balanced.

In Leeds City Council v HMRC 4, the Upper Tribunal (UT) held that the correct approach was that adopted in Data Select. However, in McCarthy & Stone (Developments) Limited v HMRC 5, the UT was of the view that the Denton approach should be followed. Decisions of the UT are of course binding on the FTT, but as the two decisions were of equal standing, the FTT was able to choose which decision to follow.

The FTT chose to follow Leeds. In reaching its conclusion it considered why Judge Bishopp in Leeds decided that the decision in McCarthy & Stone was wrong. The FTT agreed with Judge Bishopp that when the Court of Appeal in Denton set out a three-stage test, it was giving guidance about the operation of the Civil Procedure Rules, which emphasises the saving of costs. The FTT rules do not have such an emphasis and the Court of Appeal was not giving guidance on these rules.

Accordingly, in deciding whether or not to allow the late appeal, the FTT followed the approach in Data Select, and considered all of the circumstances of the case. The seriousness and significance of breaches were considered and weighed along with all other relevant factors. In Citipost’s case, the significant length of the delay, the lack of good reason for not appealing within the time limit and the need to ensure fairness as between taxpayers were crucial. These outweighed the only factor in favour of granting permission, that of risking the payment of money which may not be due.

The FTT found in favour of HMRC and refused permission for the late appeal.


The FTT’s decision in this case follows the approach taken in Kumon Educational UK Co Ltd v HMRC6. Further reinforcement to the decision in Leeds was of course also given in BP University College of Professional Studies Ltd v HMRC7. It can be expected then that, unless and until Leeds is overturned, both the FTT and the UT will follow it in preference to McCarthy & Stone.

The decision can be read here.