First-tier Tribunal (Tax)

[2010] UKFTT 576 (TC)

TC00826

Appeal number: TC/2010/03400

Fixed penalty for late delivery of personal tax return – Appellant suffered bereavement of father – excessive delay – whether reasonable excuse - no

FIRST-TIER TRIBUNAL

TAX

                                               JUDITH NAYLOR                              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 4 February 2010 and HMRC’s statement of case submitted on 19 May 2010

© CROWN COPYRIGHT 2010

DECISION

1.       This is an appeal against a first fixed penalty imposed by HMRC for the late filing of the Appellant’s personal tax return for the year ending 5 April 2008.

2.       The Appellant was issued with a personal tax return on 6 April 2008. The filing date was 31 October 2008 for a paper return or 31 January 2009 if filed on-line. The paper return was received by HMRC on 16 December 2009. A first fixed penalty notice was issued on 17 February 2009 and a second fixed penalty notice on 4 August 2009.

3.       Under Section 8 of the Taxes Management Act 1970 where a person is sent a notice to file a return they are required to deliver that return by the filing date, failing which under Section 93(2) TMA 1970 a penalty is imposed of £100. Under Section 93(4) TMA 1970 if the return remains outstanding six months after the filing date the Appellant becomes liable to a further penalty of £100. The Appellant has not appealed  the second fixed penalty imposed on 4 August 2009.

4.       On 13 March 2009 the Appellant appealed the first fixed penalty saying that her father had been “ill in both mental and physical capacities and required constant care before agreeing to enter a nursing home in February 2009. A four month period of dreadful times.”.

5.       HMRC had issued letters to the Appellant on 30 April 2009, 24 July 2009 and 3 September 2009 advising her that her appeal could not be fully considered until her return for the year ended 5 April 2008 had been received.

6.       On 27 October 2009 the Appellant requested a review of HMRC’s decision reiterating her previous grounds of appeal and saying that from September 2008 to July 2009 when her father passed away, “any sort of normal way of life was non-existent”.

7.       On 10 November 2009 HMRC wrote to the Appellant advising her that her return for the year ending 5 April 2008 had still not been received and on 20 January 2010 HMRC issued its review conclusion upholding the original decision imposing the penalty.

8.       The Appellant appealed to the First-tier Tax Tribunal on 4 February 2010.

9.       A Tribunal may set aside a penalty if an Appellant is able to show that reasonable excuse existed for the failure to file the return on time, and that the failure was rectified without an unreasonable delay after the excuse had ceased. Otherwise a penalty must be confirmed.

10.    The Appellant filed her return on 16 December 2009 and therefore the period of default in this case is from 31 October 2008 to 15 December 2009, a period of 1 year 46 days.

11.    Reasonable excuse is not defined in legislation and the term is given its normal everyday meaning. HMRC takes the view that it would mean something exceptional or out of the taxpayer’s control for example the serious illness of the Appellant or bereavement of a close relative.

12.    The Tribunal took into consideration the fact that the Appellant had been going through a difficult period because of the illness of her father. However the paper return was due by 31 October 2008 and there was sufficient time from the return being issued to the Appellant in April 2008 prior to the Appellant’s father’s illness, for the Appellant to either file the return or make some other form of arrangement. There was also an unreasonable delay after the point in time when the Appellant’s father entered a nursing home and the return being filed on 16 December 2009. The Appellant had also been making self-assessment returns since 1998/99 and therefore would have been experienced with the self-assessment system and aware of penalties imposed for not filing returns on time. Previous returns, that is for the years 2004/05 and 2006/07 were filed on-line. The fact that the Appellant requested a review of HMRC’s initial decision on 27 October 2009 demonstrated that she was capable of dealing with her tax affairs during the period of default.

13.    For the reasons set out above, the Tribunal concluded that the Appellant had not shown that a reasonable excuse had existed for her failure to file the return on time and throughout the period of default and accordingly dismissed the appeal.

14.    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