In Omar Rafique v HMRC [2026] TC09874, the First Tier Tribunal (FTT) found that an application to reinstate a struck-out VAT appeal should be refused. The appellant had persistently failed to comply with tribunal directions and 'Unless Orders', and had repeatedly submitted AI-generated correspondence containing fabricated case authorities.
HMRC wrote to the appellant, Mr Rafique, on 2 April 2024, regarding a Personal Liability Notice (PLN) in respect of VAT penalties for Deliberate behaviour transferred to him from his company, Karma Lounge Limited. Immediate payment was requested, with the threat of potential bankruptcy proceedings.
- Mr Rafique filed a Notice of Appeal with the First Tier Tribunal (FTT) on 4 April 2024, providing only the first page of each HMRC letter and sparse grounds of appeal. These included claims that:
- The company had not been given an opportunity to correct its VAT returns or provide invoices.
- He had resigned as a director of the (then ceased) company and should not be liable.
- It was against natural justice not to allow him to appeal.
- HMRC applied to the FTT in August 2024 for more detailed grounds of appeal, noting that several grounds were generic and that Mr Rafique had been given multiple previous opportunities to provide supporting documents.
- The FTT directed Mr Rafique on 11 November 2024 to file amended grounds of appeal by 25 November 2024.
- He did not comply and did not contact the FTT.
- On 6 February 2025, Mr Rafique sent an email to HMRC (later forwarded to the FTT) containing detailed grounds of appeal with several case citations.
- Based on its tone, structure, and an unfilled placeholder ("[Name of Agent/Third Party]"), the FTT found that the email had been generated by Artificial Intelligence (AI) and had not been reviewed by Mr Rafique.
- The case citations were found to be AI hallucinations; the references were incorrect, and none of the cases supported the propositions relied upon.
- The FTT issued two Unless Orders on 12 May 2025, requiring Mr Rafique to provide 18 items by 11 July 2025, including copies of the PLN and related decisions, copies of VAT returns, detailed grounds of appeal, the identity of a third party said to be at fault and correct citations for any case law relied upon.
- Mr Rafique sent further emails to the FTT on 8 July 2025 containing additional case citations.
- The FTT again found these to be AI-generated, with uncompleted placeholders (e.g. insert date if known) left in the text and further hallucinated cases.
- On 16 July 2025, Mr Rafique was admitted to hospital following a heart attack, spending three nights there.
- The FTT issued a further Unless Order on 22 July 2025, taking account of the appellant's ill health, granting two further months to comply and also requiring the production of a headed medical certificate.
- On 4 September 2025, Mr Rafique sent a further 'skeleton argument' to the FTT.
- This was found to be AI-generated, containing four case citations, one of which did not appear to exist, and three of which did not support the propositions advanced.
- The deadline of 22 September 2025 passed without any documents being provided. The appeal was automatically struck out on 4 October 2025.
- On 28 October 2025, Mr Rafique applied to the FTT for reinstatement.
- The application itself was found to be AI-generated, contained a further unfilled placeholder (e.g. Insert date before deadline - within 28 days of letter), and cited four cases, two with incorrect citations and three that did not support the propositions relied upon.
- No documents were attached despite the appellant claiming they had already been collated.
The FTT found that:
- Mr Rafique's application to set aside the confirmation of automatic strike-out should be refused.
- The strike-out flowed automatically from Mr Rafique's admitted failure to comply with the Unless Order, and no valid basis for setting it aside had been advanced.
- The application for reinstatement of the appeal should also be refused, applying the three-stage Martland test as adapted by Chappell v The Pension Regulator [2019] UKUT 209.
- Mr Rafique's breaches were extremely serious and significant.
- He had failed to comply with directions issued as far back as November 2024 (months before his heart attack) and had still not provided the required documents even at the date of the reinstatement application.
- No adequate explanation for the breaches of the directions and Unless Orders was provided.
- The ill health excuse could not account for the failures that predated July 2025. No medical evidence beyond the initial discharge summary was provided to explain the continuing failure over the subsequent nine months.
- The balance was overwhelmingly against reinstatement.
- The appeal had no reasonable prospects of success as it lacked any identified decisions under challenge or proper grounds.
- Reinstatement would divert scarce public resources and cause prejudice to HMRC and other litigants.
- Further delay and interlocutory applications were inevitable.
- Mr Rafique's breaches were extremely serious and significant.
Editor's comment
In paragraphs 97 to 103 of the decision, the FTT discussed the appellant's use of AI. It noted that while it was understandable that an unrepresented litigant might turn to AI in the hope of levelling the playing field, all parties, whether represented or not, are under a duty to ensure that what they submit to the FTT is factually correct and true. All parties have an obligation to verify the accuracy of the submissions they make and not to mislead the FTT.
The tribunal stopped short of referring the matter for contempt of court on the basis that there was no evidence the appellant appreciated that AI could produce fabricated authorities or that relying on such material could constitute contempt of court.
However, the FTT issued an express warning to Mr Rafique that should he pursue a further appeal, citing fabricated authorities would no longer be excusable ignorance.
Useful guides on this topic
Appeals: Late
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Penalties: Deliberate Behaviour
What penalties apply to deliberate behaviour? What is deliberate behaviour?
Personal Liability Notices (PLNs)
A Personal Liability Notice (PLN) may be issued by HMRC in the event of a company's or a Limited Liability Partnership's (LLP's) failure to pay its tax debts or tax penalties to HMRC. A PLN will transfer all or part of the liability to pay the debt to one of its officers.
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