Coyle – Upper Tribunal refuses permission to appeal out of time

In Michael Coyle t/a Coyle Transport v HMRC [2020] UKUT 0113 (TCC), the Upper Tribunal (UT) set aside the decision of the First-tier Tribunal (FTT) for errors of law, but reached the same conclusion as the FTT and refused the taxpayer permission to appeal out of time.

Background

On 12 December 2012, HMRC seized a lorry (vehicle registration PHZ6358) and its load of beer.

On 17 December 2012, Mr Michael Coyle (the appellant) wrote to HMRC objecting to the seizure of the lorry and confirmed that he traded as 'Coyle Transport'. 

On 2 August 2013, HMRC issued an excise duty assessment under section 21(1A), Finance Act 1994, in the sum of £29,140 (the duty assessment) and on 3 September 2013, a related penalty assessment under Schedule 41, Finance Act 2008, in the sum of £5,828 (the penalty assessment). Both assessments were addressed to Coyle Transport. 

On 10 July 2018, the appellant appealed to the FTT. 

The grounds of appeal gave the following reason why the appeal was made late:

"This assessment was brought in relation to vehicle PHZ6358, which is owned by the Appellant's father. This assessment was addressed to Coyle Transport which belongs to the Appellant's father. It was only when HMRC contacted the Appellant directly did he realise that they were not trying to fix him with the assessment."

The substantive grounds of appeal were:

"Coyle Transport for which our client Michael Coyle was registered as sole proprietor was not the Coyle Transport which was operated by his father Mr Eamon Coyle, who was the registered owner of vehicle registration PHZ6358 which was the vehicle involved in the interception by HMRC."  

FTT decision

The FTT refused permission to bring a late appeal, holding that the appellant was aware of the assessments when they were issued.

The appellant argued that the assessments were addressed to the Coyle Transport operated by his father and were not properly addressed to him and as such, time did not begin to run at all in relation to any appeal. The FTT accepted that Coyle Transport was neither a natural or legal person but noted from section 114, Taxes Management Act 1970 (TMA) (which provides that want of form or errors are not to invalidate assessments), that the relevant question was how a reasonable person, looking at the assessments addressed to Coyle Transport would objectively have read them. The FTT concluded that the assessments were received by the appellant and would have been understood as being directed to the appellant who was the person conducting the business at that time, rather than to his father. 

The appellant appealed to the UT. 

UT decision

The UT set aside the FTT's decision but also refused the appellant permission to appeal out of time. 

In the view of the UT, the FTT had erred in law in concluding that HMRC had made assessments against the appellant, rather than his father.  

While the FTT was entitled to take into account the correspondence between the appellant, trading as Coyle Transport, and HMRC, when applying the reasonable recipient objective test, and to conclude that the appellant had not provided good reason for the delay, the FTT went further than it needed to. It only had to assess the merits of those issues in line with the application to appeal out of time. 

In addition, the FTT misdirected itself on the law, as section 114, TMA, does not apply to excise duty assessments and related penalties made under Finance Act 1994 and Finance Act 2008.

As the FTT had erred in law in considering that section 114, TMA, was applicable in the circumstances of the case and in deciding whether there were valid assessments (this should have been determined at a subsequent substantive hearing, should permission to appeal late be granted), the UT set aside the FTT's decision and remade it. Taking into account the significant length of delay of 4 years and 9 months, the lack of a good explanation for the delay, the weakness of the appellant’s substantive case, the need for litigation to be conducted efficiently, at proportionate cost, and for time limits to be respected, the UT concluded that permission to appeal out of time should be refused. 

Comment 

In this case, it was the appellant's prior correspondence with HMRC and his VAT registration confirming that he was trading as Coyle Transport, to whom  the assessments were addressed, which influenced both the FTT and the UT in concluding that a reasonable recipient, in the appellant's circumstances, would have understood the assessments to be directed to the person conducting the business at the relevant address ie the appellant.  

The appellant's argument that no valid assessments had been issued raises an interesting issue. Under the relevant legislation (section 16(1B) and (1F), Finance Act 1994 and Schedule 41, Finance Act 2008) a right of appeal only arises once there is something amounting to an excise duty assessment and penalty assessment. Had the appellant been correct in his argument that no assessments had been made, the FTT would have no jurisdiction to deal with the purported appeal and would be unable to give permission in relation to non-existent assessments.  

The decision can be viewed here.