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McCarthy and Stone shows ‘tribunals are becoming stricter on time limits’

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HMRC v McCarthy and Stone (Developments) Ltd (PTA/345/2013) concerned an application by HMRC for an extension of time to provide a notice of appeal to the Upper Tribunal under the Tribunal Procedure (Upper Tribunal) Rules, SI 2008/2698 (‘the UT rules’).

The FTT had decided in the taxpayer’s favour in a VAT appeal. The FTT granted HMRC permission to appeal against the decision, but HMRC subsequently failed to lodge a notice of appeal with the Upper Tribunal within one month of the permission notice being issued, as it was obliged to do under rule 23 of the UT rules. The notice of appeal was instead lodged 56 days after the one month deadline had expired. The Upper Tribunal refused HMRC’s application to extend the one month time limit. The case is noteworthy because of the stricter approach taken by the Upper Tribunal on time limits.

In its decision, the Upper Tribunal acknowledged that the Civil Procedure Rules (CPR) applicable in civil courts did not directly apply in tax tribunal appeals. The Upper Tribunal stated however that in applying the overriding objective to deal with cases justly (a principle set out in rule 2 of the UT rules), it ought not to take a more relaxed approach to compliance with rules and directions, including those relating to time limits, than would be taken by civil courts. In particular, the tribunal discussed the case of Andrew Mitchell v News Group Newspapers Ltd [2013] EWCA Civ 1537, where the Court of Appeal held that under the new CPR 3.9, courts had to give considerations of efficiency and the need to ensure compliance with procedural rules more weight than other considerations, when hearing applications for relief from sanctions imposed for non-compliance with procedural rules.

The Upper Tribunal in McCarthy and Stone held that in applying the overriding objective, it similarly ought to accord more weight to efficiency and the need to ensure compliance with the UT rules, than to the other factors listed in the overriding objective, such as flexibility and the avoidance of unnecessary formality.

The decision represents a subtle but significant hardening of the tribunal’s approach to time limits and sends a clear message to parties engaged in litigation before the tax tribunals that those who fail to comply with procedural rules do so at their peril. The need to ensure effective case management of tribunal appeals, in accordance with the tribunal’s procedural rules and the overriding objective, is acutely evident from this case.