The limits of tribunal guidance

In HMRC v MedPro Healthcare Limited and others (MedPro), the Court of Appeal (CoA) confirmed that the Upper Tribunal (UT) is entitled to give guidance to the First Tier Tribunal (FTT) on the exercise of a statutory discretion. 

The COA also confirmed that the test set out in Martland v HMRC [2018] (Martland), as reinforced in HMRC v Muhammed Hafeez Katib [2019] (Katib) remains the correct approach when considering whether to grant extensions of time to allow appeals submitted out of time; with a primary focus on a case by case analysis of fact, in determining which limb of the test shall bear more weight.

Although not central to the relevant issues in dispute, the background facts in MedPro saw the Appellant face an investigation by HMRC, who issued a series of VAT assessments, penalties and notices against the company and its director. Appeals were lodged outside of the statutory 30-day period, which begins to run from the date of  HMRC’s decision, or the date of HMRC’s review conclusion (if one is requested). The FTT refused to grant an extension of time to allow the Appellant to lodge an appeal. The UT allowed the appeal, remitted the matter back to the FTT and provided guidance to the FTT on the exercise of their discretion in such circumstances. 

The issue on appeal to the CoA was whether the UT’s approach as outlined above was correct. 

Not in dispute in these proceedings, the Martland test has long provided the starting point for such decisions. It is a three-stage test for handling applications for permission to appeal outside of the statutory time limit, drawing on civil court principles. The framework requires the tribunal to consider 

1. The length of the delay 
2. The reasons for the delay
3. All the circumstances of the case, including prejudice to the parties. This final stage requires an assessment of the delay on a case-by-case basis. 

Importantly, Martland, as reinforced in Katib, emphasises the importance of complying with statutory time limits and maintaining procedural discipline in tribunal litigation.

Judge Cannan and Marcus Smith J of the UT universally agreed that the three stage test and the guidance set out in Martland was entirely appropriate to be applied in this case. However, they reached different conclusions on whether the UT was entitled to give guidance to the FTT. The CoA touched on this and explained that: 

“Marcus Smith J considered that it was impermissible for the UT to give such guidelines, whereas Judge Cannan considered that that was part of the function of the UT. Since Marcus Smith J had the casting vote, his view carried the day. But both members agreed that, if it was permissible for the UT to give such guidance, then the guidance given in Martland was appropriate”. 

The key issue before the CoA was one of principle rather than fact. The CoA was required to determine whether the UT could lawfully provide guidance to the FTT on the exercise of its statutory discretion to extend time for appeals, for example, the weighting of specific factors within the Martland test. The appeal raised the question of whether the UT’s guidance improperly limited the FTT’s discretion per s.83G(6) of the Value Added Tax Act 1994, or whether it is a legitimate means of ensuring consistent tribunal decision-making.

The CoA rejected the argument that the UT lacked the proper power to issue guidance to the FTT on the exercise of its discretion.  The CoA further maintained that it was  an important function of the UT to develop and provide guidance, with a view to ensuring consistency in the application of specialised statutory schemes. It further noted that this role extends to not only the interpretation but also the application of statutory powers. In effect, the CoA held that the UT guidance didn’t unlawfully fetter the FTT’s discretion. The CoA abstained from further interference, remitting the case back down to the FTT. 

Comment

The CoA decision confirmed that the UT is capable of providing guidance to the FTT on how to exercise its discretionary powers and verified  that the Martland test is the correct approach to follow when deciding whether to allow tax appeals that are out of time. 

The practical effect of this case on tax litigation is that the FTT are prevented from adopting a lenient approach to late filings. This underscores the importance of complying with statutory deadlines, as delays will need to be clearly explained with sound reasoning supported by evidence. 

In March 2026, MedPro appealed the CoA decision to the Supreme Court. It remains to be seen whether the re-enforced and stringent approach to late appeals will be overturned, and what is made of the CoA finding as to the UT’s authority to provide guidance to the FTT on such matters.