First-tier Tribunal (Tax)

[2010] UKFTT 55 (TC)

TC00368

Appeal number TC/2009/12884

INCOME TAX – late filing of partnership return – penalties – reasonable excuse – HMRC excusing late filing in another similar case justifies excuse in this case - s93A(6) TMA 1970 – no reasonable excuse found on the facts – appeal dismissed

FIRST-TIER TRIBUNAL

TAX

                                             EXPRESS AGENCY                             Appellant

                                                                      - and -

                                 THE COMMISSIONERS FOR HER MAJESTY’S

                                       REVENUE AND CUSTOMS (Income Tax)    Respondents

                                                TRIBUNAL: Nicholas Aleksander (Tribunal Judge)

The Tribunal determined the appeal without a hearing under the provisions of Rule 26

of the Tribunal Procedure (First-tier Tribunal)(Tax Chamber) Rules 2009.

This Decision contains full written findings and reasons for the summary decision released on 15 December 2009.

© CROWN COPYRIGHT 2010

DECISION

1. This is an appeal against the penalty imposed for the late filing of the partnership tax return for the year ending 5 April 2008.  The appeal was allocated to the default paper track.  In reaching my decision I read the Appellant's Notice of Appeal and other correspondence, and the Respondents' Statement of Case and attachments.  I gave my decision to dismiss the appeal in a Decision Notice released on 15 December 2009, which set out in summary the reasons for my decision.  The Appellant has requested a decision with full reasons with a view to seeking leave to appeal to the Upper Tribunal.

2. Section 12AA(2) Taxes Management Act 1970 ("TMA") provides that where a partnership is sent a return, the representative partner is required to complete it and send it back by the filing date. For returns for the years ending 5 April 2008 onwards,  the filing date for returns submitted on paper is the later of 31 October following the end of the tax year to which the return relates, or 3 months from the date of issue of the return or notice to file.  For returns submitted online, the filing date is the later of 31 January after the end of the tax year to which the return relates, or 3 months from the date of issue of the return or notice to file (see section 12AA(4)-(4E) TMA).  Where the representative partner fails to comply with the notice all partners are liable to a penalty of £100 each (section 93A(2) TMA).   Under section 93A(6) TMA 1970, if the representative partner is able to show that there was a reasonable excuse for the whole period of default the penalty may be set aside. There is no definition in the legislation of a "reasonable excuse". Each case has to be considered on its own merits.

3. HMRC provide software on their website to enable individuals to file straightforward tax returns online themselves. However partnership returns (amongst others) can only be filed online using commercial software. The requirement that commercial software has to be used to file partnership tax returns online has always been the case, and this is made clear in HMRC's leaflets and on their website.  HMRC's website includes links to sources of various low-cost commercial products. 

4. The Appellant partnership, Express Agency, filed its tax return for the year 2007/8 on 22 January 2009 in paper form. It is not disputed that the relevant filing dates were  31 October 2008 if in paper form, or 31 January 2009 if filed electronically.   The Appellant's bookkeeper attempted to use HMRC's own software to file the return electronically, but it could not be used for a partnership return.  She therefore filed a paper return, which was received by HMRC on 22 January 2009.

5. The Appellant's bookkeeper states that she prepared a partnership return for another client. Because she could not file that return electronically using the software provided by HMRC, she also filed it in paper form. She states that HMRC eventually accepted that the other taxpayer had a reasonable excuse for the late filing of that return in paper form. The Appellant submits that it is unfair for HMRC to refuse to excuse the late filing of the Appellant's partnership return, when they accepted that a reasonable excuse existed for the other taxpayer in identical circumstances.

6. The Appellant is correct that HMRC should normally treat taxpayers in identical circumstances in the same way. This is reflected in paragraph 4 of their Charter, which states that they will treat taxpayers "even handedly". However, I cannot treat HMRC's decision in the other case mentioned by the Appellant - of which I have only outline details from the Appellant – as justifying the late paper filing in this case. First, I have been given no evidence to demonstrate that the circumstances relating to the bookkeeper's other client are in fact identical. I do not know if there may be differences between the two cases which justify the different treatment (for example, was the other client told by HMRC that they would be able to file electronically using HMRC's software - notwithstanding the statements to the contrary on the website and in the leaflets)?  Secondly, if the two cases are on all fours, HMRC were wrong in allowing the other taxpayer to file a paper return after 31 October 2008 without incurring a surcharge. I cannot allow that "wrong" to justify a further "wrong" in this - and possibly other - appeals.  Any complaint the Appellant may have about HMRC's conduct may be better directed to the Revenue Adjudicator who can consider issues of maladministration – which is beyond the remit of this Tribunal.

7. I also note that the Appellant's return was prepared by a professional bookkeeper, who prepares and files tax returns for a number of other taxpayers.  As such she should have been aware that commercial software is required to file partnership returns electronically.

8. I therefore find that the Appellant did not have a reasonable excuse for the late filing of its tax return, and its appeal must therefore be dismissed.

9. As the decision contains the full findings and reasons for the summary decision released on 15 December 2009, the Appellant is now at liberty to apply for permission to appeal. 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.

Nicholas Aleksander

TRIBUNAL JUDGE

RELEASE DATE: 3 February 2010