UT Upholds Rejection of Late IR35 Appeal

Disagreements with HM Revenue and Customs (HMRC) can be complicated and protracted, but it is vital to comply with deadlines at every stage of the process. In a recent case, a limited liability partnership (LLP) failed to convince the Upper Tribunal (UT) that it should be allowed to make an appeal against a tax assessment out of time.

The LLP served as the vehicle through which a tennis commentator provided his services to a broadcaster. In June 2021, after communicating with both the LLP and the broadcaster, HMRC issued an opinion that IR35 (commonly known as the 'intermediaries legislation') applied to the arrangement and additional Income Tax and National Insurance Contributions were therefore due.

The LLP's accountants sent an email to HMRC in July, disagreeing with the decision and setting out a number of disputed points. HMRC did not respond to the points raised, but confirmed its view on 8 December, stating that the accountants had 30 days to either accept its offer of an internal review or appeal to the First-tier Tribunal (FTT). The accountants responded the same day but did not specifically request a review. On 25 January 2022, HMRC informed the LLP that, the time limit having elapsed, the matter was now treated as settled. A subsequent request for a review was rejected by HMRC, and on 10 March the LLP appealed to the FTT.

The FTT concluded that the delay in requesting a review had been a mistake. Although this was rooted in the accountants' view that they had inadequate information, as HMRC had not replied to the points raised in July 2021 nor disclosed information from the broadcaster that it had replied upon, the FTT considered that no adequate reason for the mistake had been given. Taking into account all the circumstances, it was not persuaded to grant permission to bring a late appeal. However, it stated that it would have granted permission had the appeal been notified within a reasonable period after 25 January 2022, when it became clear that HMRC considered the time limit to have expired.

The LLP appealed to the UT. It argued that the reasons for the delay were wider than simply a mistake having been made, and the FTT had wrongly stated that the LLP had not contended that the accountants' response on 8 December was a request for a review. The FTT had also not considered the impact of HMRC's failure to provide information – in particular the information from the broadcaster – on the LLP's ability to request a review or make an appeal. Furthermore, the FTT had not stated what it would have considered a reasonable delay after 25 January 2022.

The UT dismissed the appeal. The FTT had had the relevant facts in mind and its decision contained no error of law. There was no requirement for the FTT to define what it would have considered a reasonable delay.