First-tier Tribunal (Tax)

[2010] UKFTT 308 (TC)

TC00595  

Appeal number TC/2010/02168

Late filing of Partnership Return – reasonable excuse?

FIRST-TIER TRIBUNAL

TAX

                                      EAMAS CONSULTING LLP                     Appellant

                                                                      - and -

                                 THE COMMISSIONERS FOR HER MAJESTY’S

                                                   REVENUE AND CUSTOMS               Respondents

                        TRIBUNAL: Mr P M Petherbridge (Chair)

                                                Ms Shameem Akhtar (Member)

The Tribunal determined the appeal on 5^th May 2010 without a hearing under the provisions of Rule 26 of the Tribunal Procedure (First-tier Tribunal)(Tax Chamber) Rules 2009 (default paper cases) having first read the Notice of Appeal dated 3^rd March 2010,  HMRC’s Statement of Case submitted on 7^th April 2010 and the Appellant’s Reply dated 15^th April 2010.

© CROWN COPYRIGHT 2010

DECISION

1.     The Tribunal decided to dismiss the appeal.

2.     The Appellant had not shown “reasonable excuse” for the late filing of the partnership return of Eamas Consulting LLP for the year ending the 5^th April 2008, which was not filed by the Appellant until the 27^th August 2009 and the period of default in this case runs from the 31^st October 2008 until the 27^th August 2009 and the penalty determination of £100 was confirmed.

The Respondent’s case

3.     Eamas Consulting LLP is a partnership, the representative being Mr Robert Nigel Eames and the other partner being his son, Mr Robert Andrew Eames.

4.     The partnership return was issued to the Appellant on the 6^th April 2008 and the filing date for that return was the 31^st October 2008 for a paper return, or the 31^st January 2009 if the return was to be filed on-line.

5.     The paper return was received by the Respondent on the 28^th August 2009.

6.     The Respondent issued its first penalty notice on the 17^th February 2009 and a second penalty notice on the 4^th August 2009.

7.     The Tax Return and Guidance notified the Appellant of the filing dates and the consequences of late filing.

8.     The first automatic penalty of £100 was charged and put on the statements when the return was not received by the due filing date, which was the 31^st October 2008.

9.     The second fixed automatic penalty of £100 was also imposed when the return had not been filed by the 31^st July 2009.

10.  The 2007/2008 partnership return, which was due on the 31^st January 2009, was not received by the Respondent until the 28^th August 2009.

11.  The decision of the Respondent was reviewed on the 11^th February 2010 and the conclusion of the review is set out in folio 7 of the bundle.

12.  In that review, the Respondent noted that the Appellant had said that the return had been sent to the Suffolk and North Essex Area without any date having been provided as to when that return had been sent.   The Respondent said that there was no evidence to show that a partnership tax return for the Appellant had been received at any HMRC office before the 28^th August 2009.   It was noted, however, that the individual tax returns of the partners of the Appellants had been received in July 2008.

13.  On the 23^rd March 2009, Robert Nigel Eames wrote to the Respondents at Maidstone stating that he was the lead partner in the Appellant firm stating that he had completed the partnership return “last year showing NIL income for the tax year to the 5^th April 2008 and returned it to HM Revenue & Customs Suffolk N Essex Area, St Clare House, Princes Street, Ipswich, Suffolk IP1 1LW”.

14.  Mr Eames went on to say that he had completed his personal tax return showing zero income, which had been sent to the Respondent at their West Yorks and Craven Area office in Bradford.

15.  In a later letter from Mr Eames of the 26^th August 2009, he enclosed a completed tax return for the partnership stating that he could not find a copy of the original 2008 return, which he said had been sent to the Respondent at their Suffolk and N Essex Area in Ipswich.

16.  In a subsequent letter of Mr Eames of the 3^rd March 2010, he acknowledged that the partnership had to file a return even if it was a NIL return.  He said that he had Post Office special delivery receipts, but was not able to produce a receipt in respect of the filing of the partnership return the subject of the penalty.

17.  Mr Eames in that letter referred to the fact that there was 6 or 7 different offices of the Respondent that were involved and whilst acknowledging that HMRC was a large organisation having so many different points of contact was unsatisfactory so far as the tax payer was concerned.

The Law

18.  In penalty cases involving late personal or partnership returns, both the “filing date” and “period of default” are defined at sections 93 (10), 93A (7A) and 93A (8) of Taxes Management Act 1970 ( TMA 1970).   

19.  Section 93A (2) of the TMA 1970 provides that were a representative partner fails to comply with the notice all partners are liable to a penalty of £100 each.

20.  Section 93A (4) of the TMA 1970 provides that if a return remains outstanding after a further 6 months, the partners are liable to a further penalty of £100 each.

21.  Section 93A (&) of the TMA 1970 provides that on appeal a Tribunal may if it appears to them that throughout the period of default the person required to deliver the return had a “reasonable excuse” throughout the period of default set aside the determination.   Legislation does not define “reasonable excuse”.   Each case has to be considered on its own merits.   The Respondent’s view of “reasonable excuse” is there must have been an exceptional event outside a person’s control that prevented them from sending back the return by the filing date.

Findings and conclusions

22.  The Appellant’s partnership return for the year ending the 5^th April 2008 was required to be filed on the 31^st October 2008 as a paper return or the 31^st January 2009 if filed on-line.

23.  The Respondent’s case is that the partnership tax return was not filed until the 28^th August 2009 as a paper return.  The Respondent had issued its first penalty notice on the 17^th February 2009 and a second penalty notice on the 4^th August 2009.

24.  It would appear that there was no reaction by the Appellant to the first penalty notice and it was only when the second penalty notice had been issued on the 4^th August 2009 that the Appellant filed the partnership return.   The Appellant said, though, that having received the original penalty notice, their representative partner, Mr R N Eames, spoke to the Respondent’s Medway Office, which he said in his letter of the 25^th May 2010 “he returned as soon as possible” – it was a NIL return.

25.  No explanation has been afforded by the Appellant as to why if having notified the Respondent of not having received a partnership return in January/February 2009 it was not until August 2009 that the partnership return was actually received by the Respondent.

26.  The Appellant says that the original partnership return was filed appropriately, but can provide not a shred of evidence that that was, in fact, the case.  No copy of the partnership return has been produced and no evidence of it having been posed has been produced.   The onus is on the Appellant to show that he has complied with the rules concerning the filing of the partnership return and there is nothing in his correspondence with the Respondent that provides any evidence that that was the case other than Mr Eames saying he did send it in, in time.

27.  The Appellants are, therefore, unable to satisfy us that on a balance of probabilities they filed the partnership return – a NIL return – by the 31^st October 2008, as they were required to do.   No “reasonable excuse” for the late filing of the return has been provided.

28.  In the absence of the Appellants being able to show any “reasonable excuse” for the late return of the partnership return, we have no alternative but to dismiss their appeal.

29.  This document contains full findings of fact and reasons for the decision.  Any party dissatisfied with this decision has a right to apply for permission to appeal against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009.   The application must be received by this Tribunal not later than 56 days after this decision is sent to that party.  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.

TRIBUNAL JUDGE

P M PETHEBRIDGE

                                    RELEASE DATE: 6 July 2010