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HMRC’s strengthened reward scheme for whistleblowers of tax avoidance and evasion
David Sleight
One of the benefits of an appeal before the First-tier Tax Tribunal (“the Tribunal”) is that it is seen as less formal than an appeal in the Higher Courts. However, the Court of Appeal's recent ruling in HMRC v Medpro Healthcare [2026] is a reminder in case it was needed that deadlines matter in tax disputes and securing permission for a late appeal is not guaranteed.
Sections 83G(1) and (3)(b) of the VAT Act 1994 require appeals to be made to the Tribunal within 30 days of the decision in question, but the Tribunal has statutory discretion to give permission for an appeal to be brought after that period.
The Martland framework explained
In Martland, the Upper Tribunal set out what it considered the correct approach to be when considering an application to appeal out of time. That guidance, which was endorsed in HMRC v Katib [2019], created a structured three-stage approach.
- Firstly, tribunals must establish the length of the delay. Whilst very brief delays which were neither serious nor significant might not warrant extensive analysis of subsequent stages, even short overruns require proper consideration.
- Secondly, the tribunal should examine the reasons behind the missed deadline.
- Finally, the tribunal must carry out a balancing exercise, weighing all relevant circumstances, considering both the explanation offered and the prejudice which would be caused to either party by granting or refusing permission. The balancing exercises 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.
What happened in Medpro?
Following a HMRC investigation in 2019, Medpro Healthcare (“Medpro”) were issued with assessments, penalties, and personal liability notices [on some/all of the directors?].
The company filed three appeals more than 30 days after the statutory deadline. The Tribunal rejected their request for extra time, citing both the serious and significant delay, and negligent conduct as decisive factors.
Medpro then challenged this refusal at the Upper Tribunal, where they unexpectedly prevailed in July 2025. The Upper Tribunal ruled that it was impermissible for the Upper Tribunal to formulate guidelines setting out what weight the FTT should give to particular factors as to do so would amount to a fetter on the exercise of their statutory discretion. However, both tribunal members in the Upper Tribunal agreed that if it was permissible to give such guidance, the Martland guidance was appropriate.
HMRC promptly applied for and were granted permission to appeal, and in January 2026, the Court of Appeal reversed the Upper Tribunal's position. The Martland approach was vindicated, and the Medpro case was returned to the FTT for re-hearing.
Why the Court of Appeal backed this approach
Lord Justice Lewison's judgment rejected claims that the Martland guidance improperly restricted tribunal discretion. Referring to R (Jones) v First Tier Tribunal [2013] and BPP Holdings Ltd v HMRC [2017], he confirmed the Upper Tribunal’s legitimate role in providing structured guidance to ensure consistency.
The Martland framework requires tribunals to examine all the circumstances of the case, recognising that judicial discretion remains intact. Guidance provides structure, but tribunals can depart from it when justified. As the Court of Appeal concluded, "Even if there were any doubt about the guidance, it is not for this court to interfere unless the guidance is wrong in law".
Practical Steps for Taxpayers
When considering a potential appeal against a decision from HMRC taxpayers should, amongst other things:
- To avoid delays in instructing legal advisers, try and speak with and instruct a specialist before the appealable decision has been received. This means that by the time the appealable decision has been received, your team will be ready to start preparing any appeal documentation;
- On receipt of the appealable decision, calculate the appeal deadline carefully and diarise it;
- Obtain legal advice promptly to ensure there is sufficient time to prepare any appeal;
- If genuine circumstances prevent an in-time appeal, create contemporaneous records, so those circumstances can be evidenced; and
- The length of the delay will be relevant. Permission to bring a late appeal should be sought as soon as possible with detailed reasons as to why the deadline was missed.
We have noted a significant increase in enquiries about out-of-time appeals, this judgment underscores the importance of treating deadlines in tax disputes with the same seriousness as any other court deadline, and engaging with the Martland factors when seeking permission to appeal out of time.
In an unreported case before the Tribunal, where the taxpayer was over a year out of time to appeal a penalty decision, we were able to successfully make an application to appeal HMRC’s penalty decision out of time on the basis that it would cause undue detriment to the taxpayer if it were not allowed. This was partly because the taxpayer’s appeal of the underlying VAT at stake was yet to be determined.
Medpro has now sought permission to appeal to the Supreme Court. While compliance with deadlines will remain important regardless of the outcome, it will be interesting to see whether the Martland guidance is upheld.
Please contact Waqar Shah or another member of our Tax Disputes team if you have any questions about the issues raised in this article.
About the author
Waqar is a Partner in the Dispute Resolution department, focusing on the resolution of complex tax matters. He acts for high net worth individuals and corporate clients across all sectors in respect of HMRC disputes and investigations across the full range of taxes. This typically includes VAT disputes, employment tax matters (including 'IR35'/off-payroll working), customs/excise duty issues, tax fraud investigations, and more recently, National Minimum Wage enquiries.
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