First-tier Tribunal (Tax)

[2010] UKFTT 523 (TC)

TC00778

Appeal number: TC/2010/06062

INCOME TAX – SURCHARGE FOR LATE PAYMENT OF TAX – Whether Appellant had reasonable excuse for default – No – Appeal dismissed. 

FIRST-TIER TRIBUNAL

TAX

JOHN ORROCK Appellant

- and -

THE COMMISSIONERS FOR HER MAJESTY’S

REVENUE AND CUSTOMS Respondents

TRIBUNAL: MICHAEL TILDESLEY OBE (TRIBUNAL JUDGE)

The Tribunal determined the appeal on 21 October 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 19 July 2010 and HMRC’s Statement of Case submitted on 25 August 2010. The Appellant did not submit an additional submission in response to the Statement of Case.

© CROWN COPYRIGHT 2010

DECISION

1.       The Appellant was appealing against a surcharge in the sum of ₤1,054.89 dated on or around 1 April 2010 for the late payment of tax for the year ended 5 April 2009.

2.       The Appellant contended that he had a reasonable excuse for not paying the tax on time. The Appellant completed his tax return on-line for the tax year 2008/09 by the required date. The Appellant, however, was reluctant to settle the tax due online because of his concerns with the reliability of online payments. The Appellant had a previous bad experience with HMRC which attempted to penalise him for a purported late filing of a tax return caused by a glitch with the online software.  In view of his experience the Appellant preferred to pay the outstanding tax using the manual payslip. Unfortunately he did not receive the payslip from HMRC. The Appellant had contacted HMRC on two occasions requesting a payslip. In the end he decided to pay the tax after receiving a letter which advised him of interest charges on the outstanding tax. The Appellant sent a covering letter with the payment explaining that he still had not received the payslip. The Appellant was disappointed with the imposition of a surcharge. He asserted that he was not avoiding his obligation to pay the tax. The Appellant believed that he was punished for being old fashioned and wanting something in writing.  

3.       The Tribunal finds the following facts:

(1)        The Appellant’s tax liability for 2008/09 was ₤21,097.89 which was due on 31 January 2010.

(2)        The outstanding tax of ₤21,097.89 was paid on 10 March 2010. The period of default was 38 days.

(3)        HMRC issued a surcharge notice on or around 1 April 2010. The surcharge was in the amount of ₤1,054.89 calculated at five per cent of ₤21,097.89 which was the amount of tax outstanding after the expiry of 28 days from the due date of 31 January 2010.

(4)        The Appellant’s reason for not paying the tax on time was that he wished to pay the tax by the use of a payslip which HMRC failed to send despite the Appellant’s reminders.

4.       The Tribunal has limited jurisdiction in penalty Appeals. It has no power to mitigate the penalty. The Tribunal can either confirm the penalty or quash it if satisfied the Appellant has a reasonable excuse for his default. The Appellant can avoid the penalty if he satisfies the Tribunal on a balance of probabilities that he has a reasonable excuse for not paying the outstanding tax on time. If the tax payer cannot establish a reasonable excuse, the legislation takes no account of the difference between a taxpayer who has made a genuine effort to comply albeit without success and a taxpayer who has made very little effort. Either  the taxpayer is on time or he is not; either he exercises due diligence or he does not. No account is taken of the degree of culpability.

5.       In considering a reasonable excuse the Tribunal examines the actions of the Appellant from the perspective of a prudent tax payer exercising reasonable foresight and due diligence and giving proper regard to his responsibilities under the Tax Acts.

6.       The Tribunal accepts that the Appellant was not deliberately avoiding payment of the outstanding tax. The Appellant, however, chose to delay payment until he received a payslip from HMRC. In so doing the Appellant took a risk in that he disregarded or was unaware of the deadlines by which payment should be made. His actions were not those of a prudent tax payer who at the very least would have known or made enquiries of the payment deadlines.

7.       The Tribunal holds that the Appellant did not have a reasonable excuse for the tax remaining unpaid after the expiry of 28 days from the due date of 31 January 2010.. The Tribunal dismisses the Appeal and confirms the penalty of ₤1,054.89.

8.       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.

MICHAEL TILDESLEY OBE

TRIBUNAL JUDGE

RELEASE DATE: 28 October 2010