Martland v HMRC [2018] UKUT 178 (TCC)

The case that governs every late tax appeal in the United Kingdom. Martland imported the civil courts’ relief-from-sanctions structure into the Tax Chamber and created a three-stage test with a built-in presumption against the applicant. Challenged in Medpro in 2025 and restored by the Court of Appeal in January 2026, it is now more firmly entrenched than ever.

The Facts

Mr William Martland was a lorry driver. In December 2013 he was stopped at the UK border driving a vehicle loaded with mixed beer. The importation was flagged as suspicious because the Administrative Reference Code accompanying the load had already been used on an earlier consignment. Both the beer and the vehicle were seized.

Mr Martland’s account was that he had simply been engaged by a haulage company to drive the load. He had been paid cash in hand and held no paperwork of his own. HMRC did not accept that he was an innocent carrier and assessed him personally for excise duty of £24,694, together with a wrongdoing penalty of £9,507.

He had 30 days in which to appeal. He did not meet that deadline. His solicitors were unable to act without funds, and the letter of authority they required did not arrive for more than a year. By the time the appeal reached the First-tier Tribunal, it was approximately 15 months out of time.

Procedural History

• First-tier Tribunal (Judge Anne Fairpo): refused permission to notify the late appeal and struck out the proceedings. The FTT described the delay as “clearly a significant and serious delay”.
• Upper Tribunal [2018] UKUT 178 (TCC): found that the FTT had made errors in its approach, set the decision aside, and remade it, reaching the same result. Permission refused. In doing so the UT took the opportunity to give structured guidance to the FTT, because the case law on late tax appeals had become inconsistent.

The inconsistency the UT was addressing is worth understanding. Some FTT panels had been applying the civil courts’ relief-from-sanctions jurisprudence under CPR 3.9: Mitchell v News Group Newspapers [2013] EWCA Civ 1537 as reformulated in Denton v TH White Ltd [2014] EWCA Civ 906. Others had held that the CPR has no application in a tribunal governed by its own procedural rules, and had adopted a looser, more discretionary approach. The result was that identical applications could succeed or fail depending on the panel. Martland was intended to end that.

The Issues

1. What approach should the FTT take when deciding whether to give permission for a late appeal under s83G VATA 1994, s49 TMA 1970 or the corresponding excise provisions?
2. To what extent, if at all, do the civil courts’ relief-from-sanctions principles in Denton apply in the Tax Chamber?
3. What weight should be given to the applicant’s lack of representation, lack of funds, and the merits of the underlying appeal?

The Statutory Framework

The right of appeal to the FTT is time-limited by statute, not by rules of court, and the relevant provision depends on the tax:

• Direct taxes: s31A TMA 1970 (30 days to appeal to HMRC), and s49 TMA 1970, which permits HMRC to accept a late appeal where the taxpayer had a reasonable excuse and acted without unreasonable delay once it ended. If HMRC refuses, the FTT may give permission.
• VAT: s83G VATA 1994, 30 days, extendable only by the tribunal.
• Excise: the equivalent provisions in FA 1994.
• Procedure: Rule 20(4) of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 requires a late notice of appeal to state that it is late and to seek permission.

The Ratio and the Binding Guidance

The three-stage test, paragraph [44]

Drawing on Denton, the UT set out a three-stage process:

1. Establish the length of the delay. If the delay is very short, days rather than weeks, the tribunal is unlikely to need to spend much time on stages two and three. A short delay is not, however, automatically excused.
2. Establish the reason or reasons for the delay. This is a factual enquiry into what actually happened, not a search for a perfect excuse.
3. Evaluate all the circumstances of the case. This is a balancing exercise weighing the merits of the reason for delay against the prejudice that would be caused to both parties by granting or refusing permission.

The UT was explicit that the starting point is against the applicant: permission should not be granted unless the FTT is satisfied, on balance, that it should be. The applicant is asking for an exception to a statutory rule and bears the burden of justifying it.

The “particular importance” direction, paragraph [45]

The most consequential sentence in the judgment directs that the stage-three balancing exercise:

“should take into account the particular importance of the need for litigation to be conducted efficiently and at proportionate cost, and for statutory time limits to be respected.”

This imports the language of CPR 3.9(1)(a), and (b) into a statutory tribunal discretion. Its practical effect is to create a strong presumption against late appeals: two specified factors carry extra weight in every case, and both favour refusal.

The merits, paragraph [46]

The tribunal may have regard to any obvious strength or weakness in the applicant’s case, but must not descend into a detailed analysis of the underlying merits. The rationale is prejudice: an applicant who loses the chance to run a very strong case suffers greater prejudice than one who loses the chance to run a hopeless one. But the permission stage is not a mini-trial.

Litigants in person and lack of funds, paragraph [47]

The UT held that HMRC’s appealable decisions generally set out appeal rights in reasonably plain English, and that notifying an appeal to the FTT is not a complicated process even for a litigant in person. Shortage of funds “should not, of itself, generally carry any weight”. This is the passage that decided Mr Martland’s own case against him.

The Authorities Behind the Test

Denton v TH White Ltd [2014] EWCA Civ 906

A civil procedure case about relief from sanctions under CPR 3.9, and the direct ancestor of the Martland structure: identify the seriousness and significance of the breach; consider why it occurred; evaluate all the circumstances. Denton itself was a corrective to the excessive strictness of Mitchell. Its migration into the Tax Chamber via Martland is the reason a tax adviser needs to understand a civil litigation authority.

BPP Holdings Ltd v HMRC [2017] UKSC 55

The Supreme Court held that the tribunals’ approach to compliance with rules, directions and time limits should not be markedly more relaxed than that of the civil courts, and endorsed the giving of guidance on the point. BPP is the constitutional foundation for Martland’s strictness and was relied on again by the Court of Appeal in Medpro.

HMRC v Katib [2019] UKUT 189 (TCC)

The essential companion to Martland. Mr Katib faced personal liability notices of around £490,000 and had been catastrophically ill-served by an adviser whom the FTT described as a “fabulist”. The FTT admitted the late appeals. The UT reversed, holding that failures by a litigant’s adviser should generally be treated as failures by the litigant. The reasoning is that the client has a remedy in damages against the adviser, whereas the other party has none; and that a general exception for adviser incompetence would become, in the words of Hytec Information Systems v Coventry City Council [1996] EWCA Civ 1099, “a charter for the incompetent”. Exceptions are possible but rare, and even the conduct in Katib did not qualify.

Obiter and Commentary Within the Judgment

Several passages in Martland are properly characterised as observations rather than decision:

• The relationship between the CPR and the Tribunal Rules. The UT’s remarks that the FTT should adopt the same approach as the civil courts “by analogy” are reasoning by analogy rather than an application of the CPR, which does not bind the tribunal. This distinction lay dormant for seven years and then became the centre of the Medpro litigation.
• The observation that very short delays require little analysis. This is guidance about the allocation of judicial effort, not a rule of law. Later cases have confirmed that a delay of around 60 days can still require full analysis of all three stages.
• The comments on the position of unrepresented appellants. These are general observations about the accessibility of HMRC decision letters rather than findings about Mr Martland specifically.

The Medpro Challenge and the Court of Appeal’s Restoration

For seven years Martland went unchallenged. Then in Medpro Healthcare Ltd v HMRC [2025] UKUT 255 (TCC) the Upper Tribunal split. Both judges agreed that the FTT below had applied Martland and Katib mechanically and had failed to carry out any real stage-three balancing. Both agreed the three-stage structure at [44] was unimpeachable. They divided on paragraph [45].

Marcus Smith J held that importing the CPR 3.9 weighting into a statutory discretion was “clearly wrong”: the statute confers a discretion without directing what should carry extra weight, and binding guidance that supplies such a direction impermissibly fetters the discretion Parliament created. Judge Cannan dissented on grounds of judicial comity. Marcus Smith J had the casting vote, and for a period the “particular importance” direction was displaced.

In HMRC v Medpro Healthcare Ltd [2026] EWCA Civ 14 the Court of Appeal (Lewison, Whipple and Miles LJJ) unanimously reversed that conclusion and restored the Martland guidance in full. The Court held that giving structured guidance to the FTT on the exercise of statutory discretions is an important function of the Upper Tribunal which promotes consistency; that guidance is appropriate even where the discretion appears unfettered; and that BPP Holdings had specifically approved guidance on compliance with time limits. The Court added the qualification that guidance remains guidance: the FTT may depart from it where it gives sound reasons for doing so.

The Pattern of Decided Cases

The pattern is consistent and sobering. Once a delay is measured in months rather than days, and the reason is anything other than exceptional and evidenced, the odds are heavily against permission.

Practitioner Application

Building the application

• Lead with the reason, and evidence it. Medical records, correspondence, proof of when the client actually learned of the decision. An unevidenced assertion at stage two will not survive stage three.
• Deal with Katib head on. If the delay was the adviser’s fault, say so, accept that it is attributed to the client, and then show what the client did the moment they discovered it. Promptness after discovery is one of the few factors that reliably assists.
• Show obvious merit briefly. One or two paragraphs identifying a clear legal defect in HMRC’s decision (an invalid notice, an expired time limit, an incorrect behaviour category) is worth far more at stage three than a full skeleton argument, which the tribunal will not read at this stage.
• Quantify the prejudice. Prejudice to the applicant is not simply the amount assessed. Bankruptcy, loss of a licence, disqualification, or an unappealable personal liability notice are all properly in the balance.
• Apply now. Every additional day of deliberation lengthens the stage-one delay. Delay in making the application is itself a stage-three factor.

Common mistakes

• Writing to HMRC to request acceptance of a late VAT or excise appeal. HMRC has no such power; only the tribunal does.
• Relying on shortage of funds or absence of representation as the principal reason, which paragraph [47] specifically disposes of.
• Failing to notice that a completed statutory review restarts a fresh 30-day clock from the review conclusion letter, and that this deadline may also have been missed.
• Treating the merits as the main argument. They are supporting evidence at the permission stage, not the event.

Frequently Asked Questions