A taxpayer, who relied on the advice of his tax advisor when it was so obviously wrong, lost his application for permission to appeal out of time.

The appeals

Two appeals concerning Mr Singh's tax affairs were dealt with together in the First-Tier Tribunal Tax Chamber. The first appeal was against a VAT assessment for the period from 1 November 2003 to 31 December 2008. The second appeal concerned Mr Singh's self-assessment tax returns for the tax years ended 5 April 2003 – 5 April 2009.


Mr Baljit Singh traded as a sub-contractor in the construction industry between January 2003 and June 2007 after which he was forced to retire due to ill health.

In 2006/2007 HMRC opened an enquiry into Mr Singh's self-assessment tax return for the year ended 5 April 2005. HMRC also examined Mr Singh's VAT liability and decided that he should have been VAT registered. It compulsorily registered him for VAT and issued a VAT assessment on 16 November 2009.

Mr Singh's accountants lodged an application to deregister Mr Singh for VAT and submitted a nil VAT return. HMRC then issued a new VAT assessment on 22 November 2011. Mr Singh took advice from his accountant who told him to do nothing. Mr Singh did nothing for over a year until he instructed new accountants in December 2012 which led to his submitting these appeals.

The law

VAT appeals should be made to the Tribunal within 30 days of the date of the assessment but the Tribunal can give permission for an appeal to be made out of time.

When considering a request for a late appeal, the function of the Tribunal is to give effect to the overriding objective in the Civil Procedure Rules 1998 and deal with cases fairly and justly whilst taking into account all the circumstances of the case, including the need for litigation to be conducted efficiently and proportionately whilst at the same time enforcing compliance with the rules.

The Tribunal referred to the judgment of Mr Justice Morgan in Data Select Ltd v HMRC [2012] UKUT 187 which stated that the Tribunal should consider: the purpose of the time limit, the length of the delay, the explanation for the delay, and the consequences to the parties of extending or not extending time.

The Tribunal followed the guidance from the Court of Appeal in Denton v T H White Ltd [2014] EWCA Civ 906 which states that an application for relief from sanctions should be considered in three stages: "The first stage is to identify and assess the seriousness and significance of the failure to comply … which engages Rule 3.9(1). If the breach is neither serious nor significant, the Court is unlikely to need to spend much time on the second and third stages. The second stage is to consider why the default occurred. The third stage is to evaluate all the circumstances of the case ...”.

The Tribunal also referred to the Court of Appeal's recent judgment in BPP Holdings v HMRC [2016] EWCA Civ 121 confirming that the stricter approach to compliance with rules resulting from changes to Rule 3.9 of the Civil Procedure Rules and the subsequent decisions in Mitchell v News Group Newspapers Limited [2014] 1 WLR 795 and Denton should also apply in relation to tax matters.

In Mr Singh's case, the Tribunal's decision involved a balancing exercise considering factors such as the serious and significant delay in bringing proceedings, the need for finality in tax matters for both parties (and the Treasury), and the prejudice to the parties if the appeals were to be allowed.

The judgment

The Tribunal considered that Mr Singh had an arguable case. He had relied on the advice of a tax advisor, and there was a considerable sum of money at stake for him as opposed to no actual tax loss to HMRC if permission to appeal was granted.

Weighing against this was the fact that there had been a very significant and serious delay in bringing the appeal and evidence to corroborate the revised figures was still outstanding and possibly no longer obtainable. In addition, there was a need for finality in tax matters.

It was decided that it would not be in the interests of fairness and justice to allow Mr Singh to appeal out of time.


The Tribunal recognised that if a taxpayer acts (or fails to act) because of professional advice which appears to be reasonable (but turns out to be incorrect), this would still count in their favour. However, the Tribunal decided that Mr Singh's accountant's advice "was so clearly wrong that he should not have accepted it", even taking into account the fact that Mr Singh was virtually illiterate and relied on his son for assistance.