Appeal by email not validly served if it does not reach intended recipient (First-tier Tribunal, Tax)

The First-tier Tribunal has held that a notice of appeal sent by email is not validly served if it is not actually received by the intended recipient. While the email may have reached the recipient's servers and been blocked by a firewall due to its size, no evidence existed to confirm this. Instead, with no acknowledgement of receipt, the tribunal found on the balance of probabilities that the document did not reach the intended addressee.

The tribunal noted that the Tribunal Procedure (First-Tier Tribunal) (Tax Chamber) Rules 2009, which provide for tribunal appeals, did not specify how an appeal should be delivered. The tribunal also drew a distinction between the role of a server and entrusting a document to someone for delivery, such as the Royal Mail, and on that basis section 7 of Interpretation Act 1978 (that provides that notice sent by post is served when a properly addressed and stamped letter is posted) did not apply to notice purportedly served by email.

The Law

The approach to be taken by the First Tier Tribunal, Tax when deciding whether or not to accept the late notification of an appeal was very helpfully summarised by the Upper Tribunal in the case of Martland v HMRC [2018] UKUT 178 (TCC) at paras [44] to [46] as follows: 

“44.       When the FTT is considering applications for permission to appeal out of time, therefore, it must be remembered that the starting point is that permission should not be granted unless the FTT is satisfied on balance that it should be. In considering that question, we consider the FTT can usefully follow the three-stage process set out in Denton:

 (1)  Establish the length of the delay. If it was very short (which would, in the absence of unusual circumstances, equate to the breach being “neither serious nor significant”), then the FTT “is unlikely to need to spend much time on the second and third stages” - though this should not be taken to mean that applications can be granted for very short delays without even moving on to a consideration of those stages.

(2)  The reason (or reasons) why the default occurred should be established.

(3)  The FTT can then move onto its evaluation of “all the circumstances of the case”. This will involve a balancing exercise which will essentially assess the merits of the reason(s) given for the delay and the prejudice which would be caused to both parties by granting or refusing permission.

45. That 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. By approaching matters in this way, it can readily be seen that, to the extent they are relevant in the circumstances of the particular case, all the factors raised in Aberdeen and Data Select will be covered, without the need to refer back explicitly to those cases and attempt to structure the FTT’s deliberations artificially by reference to those factors. The FTT’s role is to exercise judicial discretion taking account of all relevant factors, not to follow a checklist.

46. In doing so, the FTT can have regard to any obvious strength or weakness of the applicant’s case; this goes to the question of prejudice - there is obviously much greater prejudice for an applicant to lose the opportunity of putting forward a really strong case than a very weak one. It is important however that this should not descend into a detailed analysis of the underlying merits of the appeal. In Hysaj, Moore-Bick LJ said this at [46]:

 “If applications for extensions of time are allowed to develop into disputes about the merits of the substantive appeal, they will occupy a great deal of time and lead to the parties’ incurring substantial costs. In most cases the merits of the appeal will have little to do with whether it is appropriate to grant an extension of time. Only in those cases where the court can see without much investigation that the grounds of appeal are either very strong or very weak will the merits have a significant part to play when it comes to balancing the various factors that have to be considered at stage three of the process. In most cases the court should decline to embark on an investigation of the merits and firmly discourage argument directed to them.”

Hysaj was in fact three cases, all concerned with compliance with time limits laid down by rules of the court in the context of existing proceedings. It was therefore different in an important respect from the present appeal, which concerns an application for permission to notify an appeal out of time - permission which, if granted, founds the very jurisdiction of the FTT to consider the appeal (see [18] above). It is clear that if an applicant’s appeal is hopeless in any event, then it would not be in the interests of justice for permission to be granted so that the FTT’s time is then wasted on an appeal which is doomed to fail. However, that is rarely the case. More often, the appeal will have some merit. Where that is the case, it is important that the FTT at least considers in outline the arguments which the applicant wishes to put forward and the respondents’ reply to them. This is not so that it can carry out a detailed evaluation of the case, but so that it can form a general impression of its strength or weakness to weigh in the balance. To that limited extent, an applicant should be afforded the opportunity to persuade the FTT that the merits of the appeal are on the face of it overwhelmingly in his/her favour and the respondents the corresponding opportunity to point out the weakness of the applicant’s case. In considering this point, the FTT should be very wary of taking into account evidence which is in dispute and should not do so unless there are exceptional circumstances.”

Permission to appeal was granted on the facts despite the late notice, as although the four year delay was serious and significant, the taxpayer believed a valid appeal had been made, had an arguable case that potential calculation errors had been made and the amount at stake was significant. Quite rightfully, the Tribunal took four important factors below into consideration when it granted permission.

(1)  The length of the delay, at over four years, was extremely serious and significant.

(2)  The reason for the delay was however the belief held by Mr A's accountant that a valid appeal had been made on 20 February 2014, within the appropriate time imit. However, the reason for the delay was quite simply that Mr A's accountant, was not familiar with the workings of the tribunal.

(3)  Mr A's case is arguable and is not without any reasonable prospects of success.

(4)  Most importantly, if I deny permission for a late appeal, the potential prejudice to Mr A's is extremely serious, resulting in a debt of in excess of ￡386,000 plus interest.

Taxpayers must instruct specialists fimiliar with the workings and the Rules of the Tribunal.

@Monty Jivraj

For LSGA Solicitors.