First-tier Tribunal (Tax)

[2010] UKFTT 511 (TC)

TC00766

Appeal number: TC/2010/03819

Surcharge for late payment in accordance with s.59C(2) and (3) TMA 1970]

FIRST-TIER TRIBUNAL

TAX

PETER R S EARL Appellant

- and -

THE COMMISSIONERS FOR HER MAJESTY’S

REVENUE AND CUSTOMS Respondents

TRIBUNAL: MIS$ J C GORT (Judge)

The Tribunal determined the appeal on 11 August 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 28 April 2010,   HMRC’s Statement of Case submitted on  10 June 2010 and the Appellant’s reply dated 7 July 2010.

© CROWN COPYRIGHT 2010

DECISION

1.       This appeal is dismissed.

2.       This is an appeal against both the first and second surcharges imposed in accordance with S.59C(2) and (3) Taxes Management Act 1970 (“TMA”) for the late payment of the tax due for the year ending 5 April 2008. Each penalty is in the sum of £8492.29.

3. The filing date for an online tax return for the year ending 5 April 2008 was 31 January 2009, for a paper return it was 31 October 2008. In the event a paper return was filed on 28 April 2009. The liability was a balancing payment for 2007/2008 of £171,890.40 which was due for payment on or before 31 January 2009. Various payments/credits were made against the 2007/2008 tax liability leaving a balance of £169,845.97 remaining a both surcharge trigger dates.

4. A surcharge notice was issued on 13 August 2009 for both surcharges. The period of default was from 31 January 2009 to 10 September 2009, 233 days. Following HMRC’s decision letter of 21 December 2009, the Appellant requested a review. That review, contained in a letter dated 2 February 2010 upheld the original decision. The Appellant on 28 April 2010 appealed to the Tribunal, seeking leave to appeal out of time, HMRC did not object to the appeal being out of time.

5. The Grounds of Appeal are:

“During 2007-08 I made substantial charitable donations based on which I would receive a repayment of tax. I was late in making what I thought was a claim for a tax refund. As soon as I realised that I did indeed have a tax liability, I consulted HM Revenue and Customs and was told by telephone that in the exceptional circumstance of early 2009 with a crisis in the UK banking system and with complete illiquidity on the UK stock markets, I would be given some time to make the agreed payment providing that I did so in a timely manner.  I agreed a timetable for payment with HMRC in July 2009.  I paid £21,995.79 on 17 August and £150,000 on 14 September which was the earliest that I could liquidate assets to pay the agreed liability.  At no stage in my conversations with HMRC was I advised that a late payment surcharge would be levied on me.  I am also aware that other individuals during the same period were not charged surcharges for late payment as they struggled to find liquidity to pay HMRC.  I made no such hardship requests but, equally, having been granted extra time to pay, I did not believe that my payments would be subject to a surcharge.”

6. To succeed the Appellant has to show that he has a reasonable excuse for the late payment, such excuse must exist throughout the whole period of default. HMRC contend that the Appellant never entered into a Time to Pay agreement, a course which in any event would only have been open to him if it were arranged prior to the surcharge trigger date, i.e. within 28 days of the due date. Their records show that on 25 June 2009 the Appellant was warned of the imposition of surcharges, and again on 29 June when he was contacted by the Debt Management Unit. HMRC have no record of the Appellant himself contacting them prior to 17 August 2009 when he advised that he would make payment in full by mid-September. I have carefully considered all the submissions made by the Appellant, including those made in his correspondence with HMRC, but do not find that he has provided evidence of anything that in law would amount to a reasonable excuse. He claims to have been unaware previously of having incurred any surcharges, although he has previously paid a £100 fine. He was clearly informed in June on two occasions of his liability to surcharge. He appears to have misunderstood the law and his own situation. There is no evidence of any exceptional circumstance in this case pertaining throughout the period of default.

7. 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.

MISS J C GORT

TRIBUNAL JUDGE

RELEASE DATE: 21 October 2010