First-tier Tribunal (Tax)

[2009] UKFTT 287 (TC)

TC00231        

   Appeal number: Trans/2009/379

Penalties: Construction Industry Scheme. S98A(2)(a) Taxes Management Act 1970. Late filing of form CIS36. Whether penalty affected by the fact that P35 had been filed and tax due had been paid.

FIRST-TIER TRIBUNAL

TAX

                                              LEEDS LIFTS LTD                             Appellant

                                                                      - and -

                                 THE COMMISSIONERS FOR HER MAJESTY’S

REVENUE AND CUSTOMS (INCOME TAX/CORPORATION TAX)                                                                Respondents

                                                TRIBUNAL JUDGE: Mr C S Hacking, LL.M. FCIArb.

Sitting in public in Carlisle on 13^th May 2009

No appearance by the Appellant

Mr M. Musgrove and Mrs R. Oliver of HM Revenue and Customs for the Respondents

© CROWN COPYRIGHT 2009

                                                          DECISION

1      This was an appeal against the imposition of penalties of £400 by HMRC pursuant to s98A(2)(a) Taxes Management Act 1970 (“the Act”).

 2     There does not appear to be any dispute between the parties as to the relevant facts.

3      The Appellant is a contracting company required to deduct tax under the terms of the Construction Industry Scheme (“the Scheme”) as well as in respect of its employees under PAYE. Details of pay and deductions under PAYE are submitted on form P35. Particulars of returns for subcontractors are reported on form CIS36.

 4     A letter dated 26 November 2007 from the Appellant’s accountants Buckie Barton of Horsforth, Leeds requested that the penalty imposed be rescinded as all tax due as shown on a form P35…

         “was paid before the deadline of 19^th April 2007 and this was not affected by

           anything on the form CS (sic)36.”

No further explanation for the late filing of the contractors’ return CIS36 was given.

5      It is essential to the proper operation of the Scheme that completed returns are made and that any tax due is paid, in both cases, on time.

6      It was accepted by HMRC that the Appellant had submitted its P35 and that the tax shown due had been paid. This did not however relieve the Appellant from the obligation to complete and file a form CIS36 under the Scheme even if that return might have no effect on the Appellant’s tax liability. In this respect the Appellant had failed to submit its return on time. The return had been due on 19 May 2007. It was not filed until 31 August 2007.

7      Under s98A(3)(a) of the Act the penalty payable for late filing is calculated, in the case of a company with up to 50 sub contractors, at the rate of £100 per month or part of a month during which the return is late. The Tribunal is satisfied that the penalty has been correctly calculated at £400.

8      The imposition of a penalty under s98A(2)(a) of the Act is, under s100(1) of the Act., at the discretion of HMRC. The Tribunal may set aside the penalty where it is satisfied that there is a reasonable excuse for late filing. The fact that all tax due has been paid does not constitute such a reason as the penalty is imposed for the late filing of the return, quite a separate matter from the payment of the tax.

9      In this case no reason was advanced for the late filing and in these circumstances the Tribunal’s proper course is to confirm the decision under appeal.

10        The Appellant has a right to apply for permission to appeal against this decision pursuant to Rule 39 of the Rules.   The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice.

          Mr C S Hacking LL.M. FCIArb

                                                  TRIBUNAL JUDGE

RELEASE DATE 26 June 2009