First-tier Tribunal (Tax)

[2010] UKFTT 23 (TC)

TC00338             

Appeal number TC/2009/12533

Self-assessment tax return 2007-08 – £100 late filing penalty – paper return filed 31 January 2009 – Whether delivered in time – No – Appeal dismissed and penalty confirmed – sections 8 & 93 Taxes Management Act 1970

FIRST-TIER TRIBUNAL

TAX

                                                  DALE CHALK                                 Appellant

                                                                      - and -

                                 THE COMMISSIONERS FOR HER MAJESTY’S

                                        REVENUE AND CUSTOMS (income tax)    Respondents

                                                TRIBUNAL: John Brooks (Judge)

Sitting at Bristol on 16 November 2009

© CROWN COPYRIGHT 2009

DECISION

1. By his letter of 12 December 2009 Mr Dale Chalk has, under rule 35(4) of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 (the “Rules”), requested full written findings of fact and reasons for the decision to dismiss his appeal against of a penalty of £100 imposed under s 93(2) of the Taxes Management Act 1970 (“TMA”) for the failure to comply with a notice to deliver a self-assessment tax return for the year ended 5 April 2008 as required by s 8 TMA.

2. As this appeal concerns a fixed penalty under s 93(2) TMA it has been allocated, under rule 23(1) of the Rules, as a ‘Default Paper’ case to be disposed of on the papers without a hearing in accordance the Practice Direction issued on 10 March 2009 by the Senior President of Tribunals, Lord Justice Carnwath.

3. It is clear from his ‘Notice of Appeal’, sent to the Tribunal on 15 July 2009, that Mr Chalk believes that he “should not have incurred a late filing penalty because it is clear that the SATR100 [self-assessment] tax return was delivered to HM Revenue and Customs at Bowback House Milton Keynes by the due date and posted into their box by [his] accountant” Mr Ian Hodgson of Oxford Consultants.

4. He contends that HM Revenue and Customs (“HMRC”) “mislaid” his paperwork and “it was not discovered that [the return] had not been entered into the revenue system until 24 February 2009.”

5. The posting of the return through the letter box of the Milton Keynes office of HMRC is confirmed by Mr Hodgson. In his letter of 13 May 2009 to Miss C Alexander of HMRC he states that he is “prepared to sign a court affidavit in regard to your contention that this clients [Mr Chalk’s] SATR100 was submitted ‘out of time’, it was emphatically posted through the door of HM Revenue & Customs office in Bowback House on the last day along with a dozen other SATR100’s which have all been accepted.”

6. HMRC’s case, contained in their ‘Statement of Case’ prepared by Marian Deery a Senior Appeals Review Officer, is that a self-assessment tax return form for the year to 5 April 2008 was issued to Mr Chalk on 6 April 2008 and that his completed paper self-assessment tax return was received by them on 24 February 2009.

7. As the filing date for a paper return for 2007-08 was 31 October 2008 (but 31 January 2009 if the return was filed online) HMRC contend that it was delivered out of time and unless there was a reasonable excuse the Tribunal cannot set aside the penalty.

8. HMRC submit that as there is no reasonable excuse in this case the penalty should be confirmed.

Facts

9. Having considered all the papers from and on behalf of all parties I find the following facts.

10. A paper tax return form for the tax year from 6 April 2007 to 5 April 2008 (2007-08) was issued to Mr Chalk by HM Revenue and Customs (“HMRC”) on 6 April 2008. The form contained a notice requiring Mr Chalk to make and deliver the return to HMRC.

11. On left of the front page of the paper tax returns sent to taxpayers for 2007-08, including Mr Chalk, it is stated under the heading ‘YOUR TAX RETURN’:

This Notice requires you by law to make a return of your taxable income and capital gains, and any documents requested for the year from 6 April 2007 to 5 April 2008.

You will be charged a £100 penalty if your Tax Return is received after the appropriate deadline. If you pay late you will be charged interest and possible a surcharge.

To file online go to www.hmrc.gov.uk and under do it online select Self Assessment 

12. On 31 January 2009, Mr Chalk’s accountant, Mr Hodgson, visited his (Mr Chalk’s) house for the purpose of obtaining Mr Chalk’s signature on the completed paper tax return and collecting a cheque for payment of the tax shown to be due on the tax return and another cheque in respect of accountancy fees.

13. Mr Chalk signed the paper tax return in presence of Mr Hodgson before writing a cheque in respect of the tax due and another cheque to pay his accountant.

14. The cheques, numbered 034 (HMRC) and 035 (accountant) were from the same chequebook and were both dated 31 January 2009. The cheque for the accountant was ‘cleared’ by Mr Chalk’s bank on 2 February 2009 and the cheque to HMRC ‘cleared’ on 26 February 2009.

15. Mr Hodgson subsequently posted Mr Chalk’s completed tax return and cheque through letter box of HMRC at their offices at Bowback House in central Milton Keynes on 31 January 2009 together with the self-assessment tax returns of other of his clients.

16. Mr Chalk’s paper tax return was therefore “delivered” to HMRC on 31 January 2009.

17. A ‘Penalty Notice’ was issued to Mr Chalk by HMRC on 17 February 2009.

18. Following a review by HMRC which concluded that the penalty should be upheld Mr Chalk appealed to the Tribunal on 15 July 2009.

Law

19. Before 6 April 2007, where a taxpayer was given notice under s 8 TMA to “make and deliver” a tax return to HMRC for a year of assessment he or she was required, by s 8(1A) TMA, to do so “on or before”:

(a) the 31^st January next following the year of assessment, or

(b) where the notice under this section is given after 31^st October next following the year, the last day of the period of three months beginning with the day on which the notice is given. 

20. However, after 6 April 2007, as a result of the implementation of s 88 (which omitted sub-s (1A) from, and inserted new sub-s (1D) to (1H) into, s 8 TMA) and s 92 Finance Act 2007, a taxpayer, who is given notice under s 8 TMA to deliver a return for “a year of assessment (Year 1)” must do so:

(a) in the case of a non-electronic return, on or before 31^st October in Year 2, and

 (b) in the case of an electronic return, on or before 31st January in Year 2. (see s 8(1D) TMA)

21. Therefore, a taxpayer who was given notice on 6 April 2008 requiring him to deliver a return for 2007-08 (year 1) must do so by 31 October 2008 if a paper return, or 31 January 2009 if the return is to be delivered electronically.

22. Insofar as it applies to the present case s 93 TMA provides:

(1) This section applies where—

(a) any person (the taxpayer) has been required by a notice served under or for the purposes of section 8 … of this Act … to deliver any return, and

(b) he fails to comply with the notice.

(2) The taxpayer shall be liable to a penalty which shall be £100.

…

(8) On an appeal against the determination … of a penalty under subsection (2) … above that is notified to the tribunal … the tribunal may—

(a)  if it appears that, throughout the period of default the taxpayer had a reasonable excuse for not delivering the return, set the determination aside; or

(b) if it does not so appear, confirm the determination.

Discussion and Conclusion

23. Mr Chalk was given notice under s 8 TMA to make a tax return for 2007-08. He was required by s 8(1D) TMA to deliver the return to HMRC by either 31 October 2008 if on paper and 31 January 2009 if electronically. This was clearly stated on the tax return form.

24. Although Mr Chalk chose to complete a paper tax return it was delivered to HMRC on 31 January 2009 the date specified by s 8 TMA for the delivery of electronic not paper returns.

25. By delivering a paper return on 31 January 2009 Mr Chalk has failed to comply with the s 8 TMA notice to make and deliver a tax return in accordance with that section and, as such, is liable to a £100 penalty under s 93(2) TMA.

26. Under s 93(8) TMA the Tribunal may set aside the penalty if “it appears that throughout the period of default the taxpayer had a reasonable excuse for not delivering the return” but, if the tax payer does not appear to have a reasonable excuse, the Tribunal may confirm the penalty.

27. However, I have not been provided with any evidence, either by or on behalf of Mr Chalk, which could constitute a reasonable excuse.

28. Therefore, in the absence of any such evidence of the appeal is dismissed and the penalty confirmed.

29. 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.

JOHN BROOKS

TRIBUNAL JUDGE

RELEASE DATE: 11 January 2010