First-tier Tribunal (Tax)

[2010] UKFTT 575 (TC)

TC00825

Appeal number: TC2010/03460

Penalty for late filing of Corporation Tax Return – Return sent by agent to Appellant during postal strike and possibly delayed – whether reasonable excuse - no

FIRST-TIER TRIBUNAL

TAX

                                               R L MALLINSON                              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

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 (default paper cases) having first read the Appellant’s notice of appeal dated 8 April 2010 and HMRC’s statement of case submitted on 17 May 2010

© CROWN COPYRIGHT 2010

DECISION

1.       This is an appeal against a flat rate penalty of £100 imposed for the late filing of the Appellant’s Corporation Tax Return for the accounting period ending 31 December 2008.

2.       The Appellant’s company R L Mallinson (Heating Engineers) Ltd was incorporated on 1 January 1993. Its return for the accounting period ending 31 December 2008 was due no later than 31 December 2009 but was not delivered until 5 February 2010. A reminder had been issued to the company to submit its return on 19 November 2009 and the penalty notice was issued on 25 January 2010.

3.       On 1 February 2010 the Appellant’s agents Messr Lister Gilleard & Co appealed against the penalty on the grounds that the accounts had been sent to their client together with form CT600 for signing on 28 October 2009. At that time there were postal strikes and it may have been that the Appellant had not received the form. They said that the Appellant would not have been alerted by HMRC’s reminder of 19 November 2009 as he would have assumed that everything was in hand, his agents having dealt with returns on his behalf for several years. The agent asked that the failure to file a return be treated as a “one off” and asked that the penalty be reduced to nil.

4.       Paragraph 3 Schedule 18 Finance Act 1998 requires a company to deliver returns. Paragraph 14 stipulates the filing date. Under Paragraph 17(2)(a) a flat rate penalty of £100 is payable if the return is delivered late but within three months of the relevant filing date.

5.       An appeal against a late filing penalty will be successful where the Appellant shows that there is a reasonable excuse for filing late which existed throughout the whole of the period of default. Reasonable excuse is not defined in legislation. The term is given its normal everyday meaning. HMRC takes this to mean that it is an exceptional event beyond the tax payer’s control which prevents a return from being filed by the due date, for example due to severe illness or bereavement.

6.       It is the company’s responsibility to ensure that relevant tax regulations are observed and that returns are filed by their due date. The responsibility for doing this cannot be transferred to an accountant or other agent. HMRC records appear to show that this was not the first time that the company had been late filing its returns and therefore it would been fully aware of the consequences of doing so.

7.       As the company was incorporated since 1993 and therefore having been obliged to submit Corporation Tax returns since then, the Appellant had to be regarded as fully aware of the filing date deadline. Furthermore because the Appellant would normally signs the accounts and the tax return completed by his agent, it is reasonable to assume that the Appellant would have contacted the agent when none was received prior to the filing deadline. Also, particularly during a time of postal strikes it would have been prudent for the Appellant’s agent to have checked with the client to confirm receipt. There appeared to have been a lack of communication between the accountant and the Appellant.

8.       For the above reasons the Tribunal concluded that the Appellant did not have a reasonable excuse for the late filing of its Corporation Tax return for the accounting period ending 31 December 2008 and confirmed the £100 penalty.

9.       This decision notice includes full written findings of fact and reasons for the decision. The Appellant has a right to apply for permission to appeal 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.

Michael S Connell

TRIBUNAL JUDGE

RELEASE DATE: 30 September 2010