First-tier Tribunal (Tax)

[2010] UKFTT 479 (TC)

TC00740

Appeal number: TC/2010/02757

Penalty imposed for late submission of Employers Annual Return – Appellant experienced difficulty filing on-line – whether reasonable excuse - no

FIRST-TIER TRIBUNAL

TAX

GREATHAM PARISH COUNCIL Appellant

- and -

THE COMMISSIONERS FOR HER MAJESTY’S

REVENUE AND CUSTOMS Respondents

TRIBUNAL: MICHAEL S CONNELL (TRIBUNAL JUDGE) ALAN R REDDEN (MEMBER)

Sitting in public at Newcastle, Manor View House, Kings Manor, Newcastle upon Tyne on 3 September 2010

Mr John Cunliffe for the Appellant

Mrs Rosalind Oliver Higher Officer HMRC, for the Respondents

© CROWN COPYRIGHT 2010

DECISION

1.       This is an appeal against penalties imposed for the late submission of the Employers Annual Return for the tax year ending 5 April 2009.

2.       An employer has a statutory obligation to make end of year returns before the 20 May following the end of a tax year in accordance with Regulation 73 of the Income Tax (PAYE) Regulations 2003 and paragraph 22 of Schedule 4 of the Social Security (Contributions) Regulations 2001.

3.       In the case of an employer failing to make an end of year return on time Section 98A (2) and (3) Taxes Management Act 1970 provides for a fixed penalty of £100 for each month (or part of a month) during which the failure continues.

4.       Mr John Cunliffe, Clerk of Greatham Parish Council, appeals on behalf of the Appellant. He has also made an appeal on behalf of Dalton Piercy Parish Council of which he is also the Clerk. In all correspondence he has linked the two appeals together as the circumstances are very similar but the appeals are entirely separate appeals.

5.       A paper P35 was issued by HMRC on 11 January 2009. The filing date was 19 May 2009. HMRC issued a £400 penalty notice on 28 September 2009.

6.       On 16 October 2009 Mr Cunliffe appealed the penalty on the basis that he had attempted to file the Parish Council’s P35 on-line, but because of problems he had reverted to a paper version. In this case Mr Cunliffe had not registered for filing on-line as he had done in respect of Dalton Piercy Parish Council. Having received the penalty notice he said that he had not received the paper P35 that had been issued in January 2009 and requested a duplicate paper return which was duly completed and returned to HMRC.

7.       Mr Cunliffe asked HMRC for a review of its decision outlining the problems he had encountered attempting to file on-line. There is however no record of Mr Cunliffe having registered with HMRC for filing on-line.

8.       HMRC reviewed their decision and in their review letter of 11 February 2010 pointed out that the paper P35 had been issued on 11 January 2009 allowing Mr Cunliffe ample time to complete the return by the deadline of 19 May 2009. He had not registered for filing on-line and he had enough time to complete the paper version and if it was incorrect to have it returned to him for appropriate amendments to be made. HMRC upheld the penalty but because the penalty cannot exceed the amount of tax liability for the year the £400 penalty was reduced to £200.

9.       At the appeal hearing Mr Cunliffe reiterated the same contentions made in connection with the appeal relating to Dalton Piercy Parish Council, although in this case he had not attempted to register with HMRC for filing the end of year returns on-line. He had not contacted HMRC employers helpline to request assistance in completing the paper end of year return. When the end of year returns were submitted in 2009 they were completed successfully and had these been returned before the May deadline there would have been no problems. HMRC had no evidence of contact with its helpdesk.

10.    The period of default in this case is from 19 May to 20 October 2009, that is 155 days. No penalty notice was issued for the period 20 September 2009 to 21 October 2009 and the £400 penalty was reduced to £200 representing the tax payable.

11.    Having considered the Appellant’s submissions the Tribunal concluded that Greatham Parish Council did not have a reasonable excuse for the late filing of its return and no reasonable excuse existed throughout the period of default.

12.    For the above reasons the Tribunal dismissed the appeal and upheld the penalty of £200.

13.    This document contains full findings of fact and reasons for the decision. The Appellant has a right to apply for permission against this decision. 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

RELEASE DATE: 7 October 2010