Michael Coyle t/a Coyle Transport v Revenue and Customs: -[2020] UKUT 113 (TCC)- (8 April 2020)

Key Facts

Tax Type

Issues

• The FTT refused permission to appeal out of time due to a 4-year and 9-month delay. The UT agreed, emphasizing that the time limit for appealing to the FTT applied even when challenging the validity of the assessments. The UT noted the delay prejudiced HMRC by reopening a long-closed matter and found the appellant's explanation for the delay (uncertainty about who was assessed) insufficient to justify the exceptional time lapse.
• The core legal issue centered on the validity of the excise duty assessment (£29,140) and penalty (£5,828) issued to 'Coyle Transport'. The FTT rejected the appellant's argument that the assessments were invalid due to the absence of a named natural or legal person, applying an objective test to determine the recipient. The Upper Tribunal (UT) found the FTT misdirected itself by referencing inapplicable legislation (s114 TMA 1970) and erred in evaluating the merits of the validity claim during the permission to appeal hearing. The UT concluded the FTT's approach to validity was legally flawed but remade the decision, affirming the refusal of late appeal permission.
• The UT found the FTT erred by evaluating the validity of assessments in detail during the permission hearing, which should have been a limited outline assessment. This 'mini-trial' approach exceeded the FTT's jurisdiction under s11 of the Tribunals Courts and Enforcement Act 2007, which restricts appeals to points of law. The UT remade the decision to align with the correct jurisdictional scope.
• The UT acknowledged more room for debate on applying the objective test to penalty assessments, distinguishing from direct tax cases. While HMRC argued for an objective approach, the UT noted that penal contexts often require ambiguities to favor the penalized party. However, it concluded the appellant's position on penalty validity was not sufficiently strong to warrant overturning the FTT's refusal of permission.

Holdings

• The UT upheld the FTT's conclusion that HMRC's assessments and penalty were objectively directed to Michael Coyle. The documents, including notices addressed to 'Coyle Transport' at 7 Dernalebe Road, were deemed valid under an objective test, as a reasonable recipient would understand them to apply to Michael Coyle based on his prior communications and business activities. The UT emphasized that HMRC's subjective intent is irrelevant to the validity of the assessment.
• The Upper Tribunal (UT) set aside the First-tier Tribunal (FTT) decision for errors of law. The FTT incorrectly applied s114 TMA 1970 (inapplicable to excise duty assessments) and prematurely determined the validity of assessments during a permission to appeal out of time. The UT remade the decision, reaffirming that the 30-day time limit for appeals applies even if the appellant challenges the validity of the assessments. Permission to appeal out of time was refused due to the significant delay (4 years and 9 months) and the weakness of the appellant's case.

Remedies

Tax Issue Category

Legal Principles

• The Upper Tribunal set aside the First-tier Tribunal's decision due to errors of law, including incorrect application of s114 TMA 1970 (inapplicable to excise duty) and premature determination of assessment validity. The UT emphasized that appeals to the FTT out of time remain subject to the 30-day statutory limit, even when challenging assessment validity.
• The decision relied on an objective analysis to determine whether assessments were validly made, as established in Aria Technology Limited v HMRC and other cases (e.g., GDF Suez, Mabutt). The UT held that a reasonable recipient's understanding of HMRC documents, not subjective intent, dictates assessment validity.
• The tribunal applied the principle that in penal contexts, ambiguities in notices must be construed in favor of the penalized individual, referencing Sokoya v HMRC. However, it concluded this principle had limited relevance to the excise duty assessment but acknowledged its potential application to the penalty assessment.

Disputed Tax Amount

Precedent Name

• House (trading as P&J Autos v CCE
• Baylis v Gregory
• Queenspice Ltd v HMRC
• Aria Technology Limited v HMRC
• GDF Suez Teeside Power Ltd v HMRC
• HMRC v Mabutt

Cited Statute

• Finance Act 1994
• Finance Act 2008
• Taxes Management Act 1970
• Value Added Tax Act 1994
• Tribunals, Courts and Enforcement Act 2007

Penalty Amount

Judge Name

• Jennifer Dean
• Swami Raghavan

Passage Text

• 80. We set aside the FTT Decision having identified errors of law in it. We remake the FTT's decision on the permission to appeal out of time application in relation to the contested excise duty assessment and penalty assessment. But having done so we reach the same conclusion the FTT did. Permission to appeal those assessments out of time is accordingly refused.
• 16. The FTT found the correspondence and notices were sent to Coyle Transport and were received by Michael Coyle; it concluded that, read objectively, they would have been understood at the time as being directed to Michael Coyle who was the person conducting the haulage business of 'Coyle Transport' at 7 Dernalebe Road and which operated the seized vehicle [26].
• 37(4) The question whether an assessment has been made or not is to be determined on an objective analysis. The decision-maker's subjective state of mind cannot alter that objective fact.