Back to Square One: Late Appeals After Medpro

The Upper Tribunal’s (UT) decision in Medpro & Anor v HMRC [2025] 00255 UKUT (TCC), was widely considered a recalibration of the principles governing late appeals, restoring what many perceived to be a fairer balance between procedural discipline and substantive justice. It appeared that taxpayers might no longer face an almost insurmountable hurdle when seeking permission from the First-tier Tribunal (FTT) to appeal out of time. However, the recent decision of the Court of Appeal (CoA) in HMRC v Medpro [2026] EWCA Civ 14, has reestablished a more stringent approach.

This blog is based on an article written by Adam Craggs and Liam McKay that was published in Tax Journal on 18 February 2026.

Background

HMRC opened enquiries in 2019 and issued the taxpayers with a series of assessments, penalties and personal liability notices (the Decisions), in relation to VAT. The taxpayers appealed the Decisions to the FTT, but three of the appeals were notified after the 30-day deadline set out in section 83G, Value Added Tax Act 1994 (VATA). 

While the decision of the FTT was, unusually, not published, the FTT refused permission, under section 83G(6), VATA, for three appeals to be brought out of time, applying the guidance given by the UT at [45]-[46] in Martland v HMRC [2018] UKUT 178 (TCC) and subsequently endorsed in HMRC v Katib [2019] UKUT 189 (TCC). That guidance provides that, when considering an application for a late appeal, the FTT could follow the following three-stage test applied by the civil courts:

1. Establish the length of the delay, and whether it was serious or significant.
2. Establish the reason(s) why the default occurred.
3. Evaluate “all the circumstances of the case”. This involves a balancing exercise that essentially assesses the merits of the reason(s) given for the delay and the prejudice that would be caused to both parties by granting or refusing permission. In undertaking that assessment, the FTT must take into account the factors set out at Rule 3.9 of the CPR, namely, the particular importance of the need for litigation to be conducted efficiently and at proportionate cost, and for statutory time limits to be respected. 

The UT decision

The taxpayers applied to the UT for permission to appeal the FTT's decision refusing them permission to appeal to that tribunal out of time. Before the UT, the taxpayers argued, amongst other things, that the decision in Martland was incorrect, as was the FTT's reliance on it when refusing them permission. In particular, the taxpayers contended that Martland had improperly embedded within the discretionary power contained in section 83G(6), VATA, the ex ante additional weight to be attached to the two factors set out at Rule 3.9 of the CPR. The taxpayers argued that as a result, the Martland approach obliged the FTT to attach greater weight to those two factors than might otherwise be the case, which was impermissible. 

While the UT was of the view that the three-stage structure of the discretion at [44] in Martland was "unimpeachable", the UT panel (Marcus Smith J and Judge Cannan) was unable to reach consensus on the question of whether the elevation of the factors in Rule 3.9 of the CPR was permitted as a matter of the statutory construction of section 83G(6), VATA. Instead, by way of casting vote, Marcus Smith J allowed the taxpayers' appeal on this point, finding that Martland had placed a fetter on the discretion of the FTT that was not justified by the terms of section 83G(6). In that regard, Marcus Smith J noted that the UT could not, by way of binding guidance, direct the FTT as to what weight to place on particular factors when it is considering, in all the circumstances, whether to extend time for appealing.

In contrast, Judge Cannan was not convinced that Martland (or Katib) was incorrect, and indicated that, as a matter of judicial comity, he would have dismissed the taxpayers' appeals on this issue. Further, he noted that Martland could be justified on the basis that Parliament, in giving discretion to the FTT in section 83G(6), anticipated and intended that the UT would provide binding guidance on the exercise of that discretion, in so far as such guidance was considered desirable.

Given HMRC’s consistently strict approach to late appeals, and its general resistance to them, it was perhaps inevitable that the UT’s decision would be appealed by HMRC to the CoA.  

The CoA judgment

The CoA unanimously allowed HMRC's appeal.

The CoA noted that the issue raised in the appeal was not whether the guidance in Martland was flawed, but rather, whether it was permissible for the UT to formulate guidelines for the exercise of the FTT's discretion to permit late appeals, attaching particular significance to certain factors. In considering that question, the CoA had no difficulty in concluding that the UT was entitled to give guidance to the FTT. The CoA considered several authorities, including R (Jones) v First-tier Tribunal [2013] UKSC 19, BPP Holdings Ltd v HMRC [2017] UKSC 55, and BPP Holdings Ltd v HMRC [2016] EWCA Civ 121, and noted that a number of important points emerged from these decisions, including:

1. The UT is entitled to give guidance to the FTT as to the proper approach to the lifting or imposing of sanctions for failure to comply with a time limit. On the face of it, that would include a failure to comply with a time limit for filing an appeal.
2. It is an important function of the UT to provide guidance so as to achieve consistency in the FTT.
3. Although the cases on time limits in the CPR do not apply directly, tribunals should generally follow a similar approach. The phrase “time limits” is not itself limited to any particular form of time limit.

The CoA then considered whether, as Marcus Smith J had found, the fact that the FTT's power was a discretion conferred by statute made a difference. In that regard, the CoA noted the tension between his view that, on the one hand, the guidance in Martland was appropriate, but on the other that the UT was not entitled to provide such guidance. Moreover, the CoA observed that in BPP, both the CoA and the Supreme Court approved guidance that did attach particular weight to the factors referred to in Rule 3.9 of the CPR, even though the relevant tribunal rules were silent on the matter.

Instead, the CoA considered that a useful analogy could be drawn with two cases concerning the statutory discretion given to magistrates to make awards of costs: R (Perinpanathan) v City of Westminster Magistrates’ Court [2010] EWCA Civ 40 and Competition and Market Authority v Flynn Pharma Ltd [2022] UKSC 14. The CoA noted that neither of those cases had been drawn to the attention of the UT, but both clearly stated that even where a statutory power was apparently unfettered, a superior court of record could lay down guidance, or even rules, which apply in the absence of special circumstances. 

The CoA next considered the taxpayers' argument that, while it was open to the UT to lay down guidance for the FTT in the exercise of its procedural powers under the tribunal rules, such guidance could not be used so as to inform the exercise of a substantive right to begin proceedings. Accordingly, the taxpayers asserted the UT was mistaken to equate an application for an extension of time to appeal, with a failure to comply with tribunal rules once a case had been commenced before the FTT. The CoA rejected this argument, noting the distinction the taxpayers sought to make was "extremely hard to follow" and that, amongst other things, the purpose (or at least one of the purposes) of section 83G, VATA, was to prescribe part of the procedure for appealing against a decision by HMRC and had little, if anything, to do with the substantive question of whether HMRC’s decision was in fact correct.

Finally, the CoA considered the issue of weighting, and the concern of Marcus Smith J that the Martland guidance attached significant weight to factors that were not expressly referred to in section 83G(6), without any change in the FTT rules. In rejecting that concern, the CoA noted that its decision in BPP made it clear that there would be a change of culture in the tax tribunals and that the approach in Denton v TH White Ltd [2014] EWCA Civ 906 (which gave guidance on the weighting to be attributed to the various factors listed in Rule 3.9 of the CPR), should be followed notwithstanding that the tribunal rules were silent on the weight to be attributed to the various factors to be considered. The CoA also rejected Marcus Smith J’s characterisation of the Martland guidance as amounting to a fetter on discretion as "overblown", noting that the guidance expressly recognises that there is a judicial discretion to be exercised.

Comment

The UT’s decision in Medpro generated a certain amount of optimism amongst taxpayers and practitioners that the FTT might be prepared to adopt a broader and more fact-sensitive approach when undertaking the Martland balancing exercise. In particular, it suggested there was greater scope for undertaking a more comprehensive evaluation of all relevant circumstances, such that the merits of a particular case would not be unduly obscured by the length of the delay in bringing an appeal, and with reduced emphasis on the importance traditionally attached to strict adherence to statutory time limits. Indeed, the UT’s decision guided the FTT towards a more nuanced assessment of fairness. 

However, that optimism has, at least for now, been firmly dashed. The CoA’s judgment makes clear that the orthodox approach remains firmly in place. In practice, subsequent decisions of the FTT, applying the guidance of the UT in Medpro, had already suggested that the practical impact of the UT’s decision would be limited and the hurdle facing a taxpayer seeking permission to appeal out of time remained high. The FTT's recent decision in Lands Luo Ltd v HMRC [2025] UKFTT 1207 (TC), affirmed the correctness of Martland, while decisions like Ian Smicle-Thompson v HMRC [2025] UKFTT 1063 (TC), demonstrate how difficult the test is to satisfy in anything other than truly exceptional cases. 

It is important to note that late appeals do not only arise through carelessness or indifference on the part of taxpayers. Taxpayers can, and do, find themselves out of time due to circumstances beyond their control, including ill-health or professional failings, and yet can still face an uphill struggle when seeking relief from the FTT. The advice to taxpayers and their advisers therefore remains unchanged: compliance with statutory appeal deadlines remains critical, and reliance on the FTT’s discretion is a poor substitute for timely action.