(3 min read)
When deciding whether to admit a late appeal, the Tax Tribunals must consider a number of factors, balancing the need for procedural integrity with the need to deal with cases fairly and justly. However, the Upper Tribunal decisions in Martland and Medpro created conflicting precedent on the weight to be given to these factors. After a flurry of First-tier Tribunal decisions attempting to reconcile the two, the Court of Appeal fast-tracked the hearing in Medpro, finally confirming that special weight is to be given to the need for efficient conduct of litigation and adherence to statutory deadlines. The taxpayers have now sought permission to appeal to the Supreme Court.
In the case of Martland v HMRC [2018] UKUT 178 (TCC) (Martland), the Upper Tribunal (UT) set out a three-stage test for considering whether to admit an out-of-time application to appeal to a Tax Tribunal. The final stage of the test requires the courts to balance the merits of the appeal against the potential prejudice which would be caused to both parties if permission were granted or refused. The UT in Martland emphasised that the balancing exercise should give special weight to the need for efficient conduct of litigation and adherence to statutory deadlines.
In July last year, in Medpro Healthcare Ltd. v HMRC [2025] UKUT 255 (TCC) (Medpro UT), the UT affirmed the Martland test; however, it ultimately diverged from Martland’s approach, stating that although time limits are important when considering stage three of the Martland test, there is no legal basis for concluding that they should take precedence over the merits of the case.
Following the Medpro UT decision, there was a flurry of ‘late’ appeal decisions by the First-tier Tribunal. Most (but not all) of these decisions applied both the Martland test and the Medpro UT interpretation and concluded that their decision would have been the same, regardless of which they applied. You can read more about the background to Medpro UT and the aftermath of the decision in our insight, ‘Martland and Medpro: when will the Tax Tribunals permit a late appeal?’.
Perhaps in response to this uncertainty, HMRC’s appeal against the Medpro UT decision was fast-tracked to the Court of Appeal at the end of 2025. For now, the Court of Appeal’s decision provides much-needed clarity, although the taxpayers have applied for permission to appeal to the Supreme Court.
Issues in the appeal
The key issues before the Court of Appeal were:
i. Whether senior courts and tribunals can give guidance to lower courts and tribunals.
ii. Whether tribunals should apply the final stage of the Martland test giving special weight to the need for efficient conduct of litigation and adherence to statutory deadlines. This is the issue that was key to clarifying much of the case law that followed the Medpro UT decision.
Can senior courts/tribunals give guidance to lower courts/tribunals?
The Supreme Court decision in BPP Holdings Ltd v HMRC [2017] UKSC 55 established not only that the UT is entitled to give guidance to the FTT, but that this it is an important function of the UT to achieve consistency in the FTT. Despite accepting that it was entitled to give guidance, in Medpro UT, the UT found that it had no power to do so on the basis that the statute allocated discretion to the FTT, not the UT.
The Court of Appeal acknowledged the tension inherent in that finding and disagreed with the UT’s characterisation of the Martland guidance as a fetter on discretion. Having found a useful analogy with the discretion to award costs, it found that senior courts and tribunals are permitted to give guidance about a statutory discretion even where that discretion appears to be unfettered.
In this context, the UT in Martland was entirely justified in giving guidance to the FTT that it should give special weight to the need for efficient conduct of litigation and adherence to statutory deadlines.
Which test will the Tribunals apply when deciding whether to permit a late appeal?
The Court of Appeal decision means the test stands as set out in Martland, with special weight on the need for efficient conduct of litigation and adherence to statutory deadlines.
The taxpayer had argued that even if the UT was entitled to give guidance to the FTT, the guidance it gave in Martland was nonetheless flawed.
The Court of Appeal noted that a statutory time limit is not simply a target date but is there to be respected. This alone justifies the attribution of significant weight to it. It took the view that s83G(6) of the Value Added Tax Act 1994 (the provision that allows a tribunal to admit an out of time appeal) is a rule that is designed to protect both HMRC and the tribunals from stale claims and promote finality, and that that deserves particular regard in the test.
The Court caveated the point by saying that, having found that the UT was entitled to give guidance to the FTT, it is not for the Court of Appeal to interfere unless that guidance is wrong in law.
The Court of Appeal also emphasised that guidance from a senior court or tribunal is just that: namely, guidance. This means that lower courts can deviate from the guidance given by a senior court provided they give good reasons for doing so. The court did not give specific examples. However, it is likely the case that the lower court would have to identify special circumstances that warrant a departure.
Practical takeaways
Taxpayers considering a late appeal must ensure they have strong reasons for the delay, including any special circumstances that may be relevant to how the Tribunal exercises its discretion, and should make clear in submissions any potential prejudice they would suffer if the appeal is not allowed.
