First-tier Tribunal (Tax)

[2010] UKFTT 213 (TC)

TC00514

Appeal number:  TC/2009/15059

SURCHARGE FOR LATE PAYMENT OF INCOME TAX – whether the Appellant had a reasonable excuse as a result of misleading advice by HMRC  – appeal dismissed.

FIRST-TIER TRIBUNAL

TAX

AMIR ANWAR                                   Appellant

                                                                      - and -

                                 THE COMMISSIONERS FOR HER MAJESTY’S

                                                   REVENUE AND CUSTOMS               Respondents

Tribunal:        Joanna Lyons (Judge)

Leslie Howard (Member)

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.

© CROWN COPYRIGHT 2010

DECISION

The appeal

1.       This is an appeal against a surcharge of £865.72 imposed in relation to the late payment of income tax for the year ending 5 April 2008. Mr Anwar filed his online return on 26 January 2009 and his tax liability was calculated to be £17,314.40.  Full payment was finally received by HMRC on 4 March 2009.

The issue

2.       Mr Anwar accepts that payment was made late. However he asserts that he was misled by HMRC regarding the imposition of the surcharge and that this amounts to a reasonable excuse for late payment. HMRC do not accept that Mr Anwar was misled regarding the imposition of the surcharge. The issues for determination in the appeal are as follows :-

(1) Whether Mr Anwar was misled by HMRC ?

(2) If so does this amount to a reasonable excuse for late payment?

The evidence

3.       This case was considered on the papers without a hearing under the provisions of rule 26 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009.

4.       The evidence provided consisted of a notice of appeal dated 30 September 2009 on behalf of Mr Anwar and a statement of case, together with enclosures on behalf of HMRC.

The Law

5.       Section 59B(4) Taxes Management Act (TMA) 1970 provides that the due date for payment of income tax is 31 January following the year of assessment.

6.       Section 59C(2) TMA 1970 provides that where any tax remains unpaid 28 days after the due date the taxpayer is liable for a surcharge of 5% of the unpaid tax.

7.       Section 59C(9) TMA 1970 provides that the surcharge may be set aside if the Appellant has a reasonable excuse for failing to pay the tax due. Reasonable excuse is not defined.

Findings of fact

8.       Mr Anwar resides in Singapore. He submitted his return online on 26 January 2009. He did not submit a payment until 4 March.

9.       Mr Anwar telephoned HMRC on 4 February regarding his outstanding payment. He enquired whether or not he had incurred a surcharge and was informed that no surcharge had been incurred but that interest was running on the outstanding balance. The operator stated “it’s actually incurring the interest at the moment that’s the only thing that’ll happen”.

10.    Mr Anwar then telephoned the payment line. There is no transcript of this call. He was informed that a credit card payment would incur a charge of 3 % but that payments by debit card would be free. At that stage Mr Anwar was unable to pay by debit card as he was waiting for a cheque to clear. He later paid the outstanding tax by debit card on 4 March.

11.    HMRC sent a letter to Mr Anwar on 27 February 2009 demanding payment of the outstanding balance within 28 days. The letter stated “surcharges may be due”. Their letter of 2 March made reference to interest but did not mention the imposition of the surcharge.

12.    HMRC’s website contains accurate information concerning the imposition of late payment surcharges.

13.    We find that during the telephone call of 4 February the operator should have warned Mr Anwar that a surcharge would be applicable if payment did not follow by the end of the month. However we do not find that Mr Anwar was misled by the operator’s failure to do so. The information regarding the surcharge is freely available on the HMRC website and Mr Anwar had every opportunity to pay the outstanding tax by the due date.

14.    We find that HMRC’s letters of 27 February and 2 March were potentially misleading. However we find that Mr Anwar was not misled as the correspondence could not have been received until after the due date.

Decision

15.    On the evidence provided, we made the following decisions regarding the issues in this appeal :-

(1)  Mr Anwar was not misled by HMRC regarding the imposition of the surcharge.

(2)  Mr Anwar does not have a reasonable excuse for the late payment of the tax due.

16.    Accordingly this appeal is dismissed.

TRIBUNAL JUDGE

RELEASE DATE: 11 May 2010