First-tier Tribunal (Tax)

[2011] UKFTT 98 (TC)

TC00974

Appeal number TC/2010/06785

Surcharge. Reasonable excuse.

FIRST-TIER TRIBUNAL

TAX

COLIN HUMPHREYS Appellant

- and -

THE COMMISSIONERS FOR HER MAJESTY’S

REVENUE AND CUSTOMS Respondents

TRIBUNAL: Geraint Jones Q.C.

David Williams.

Sitting in public at Ashford, Kent on 12 January 2011.

The Appellant in person.

Mr. Maffia, instructed by the General Counsel and Solicitor to HM Revenue and Customs, for the Respondents

© CROWN COPYRIGHT 2011

DECISION

1.       This appeal concerns a 5% surcharge in respect of the late payment of tax due to be paid by the 31 January 2010 under the self assessment regime. The amount of the surcharge demanded by HMRC is £274.73.

2.       The facts can be shortly stated. On the 15 January 2010 the appellant sent his self assessment return to HMRC, on paper. HMRC accepts that it was received shortly thereafter. The paper return did not contain a self assessment in the sense that the taxpayer, this appellant, had worked out the amount of tax due so that he could enclose a payment or make payment by 31 January 2010.

3.       HMRC says that it “captured” the information provided by the appellant on 16 March 2010, that is, some two months after the self-assessment return had been posted to it. Mr Maffia gave no explanation for that delay, beyond general pressure of work.

4.       The appellant's case is that he was materially misled by the advertising campaign used by HMRC in respect of its on line filing service. He complains that the advertising was materially misleading because it did not indicate that it was not a facility available to all taxpayers. In the appellant's case it was not available to him because unless he purchased specialist software, as opposed to using the facilities on HMRC's own website, he could not make a return in respect of one aspect of his declarer double income. He says that he took this matter up with his local tax office once he discovered his inability to make an online return and was told that he should send in a paper return. He says that he was not informed that, if he sent in a paper return, he would have to calculate his own tax liability.

5.       We say at once that we considered the appellant to be a witness of the truth and we accept his factual evidence.

6.       When HMRC eventually sent a calculation of tax due to the appellant it overstated the tax due by £10,000. That, Mr Maffia accepts, was a mistake. The appellant pointed out that mistake by his letter of 25 March 2010 whereafter, he says, he heard nothing within a reasonable period of time. Therefore, he telephoned HMRC but had to make for separate phone calls, on four separate days, before he was eventually able to get through after queuing, on the telephone, for considerable periods of time.

7.       In addition to the surcharge HMRC levied a late filing penalty which it has since withdrawn.

8.       HMRC contends that if the appellant is to establish that he has a "reasonable excuse" for the late payment he must show that exceptional circumstances exist. That is not the test stipulated by the legislature. The words "reasonable excuse" are ordinary English words to be given their proper everyday meaning. There is no justification for the gloss that HMRC seeks to put on those words.

9.        

10.    There can be no doubt that HMRC is actively encouraging taxpayers to file returns and many other documents on line. It is clear that they wish to move away from paper filing. There may be excellent reasons for so doing. Nonetheless, if HMRC seek to achieve that result, it must be for HMRC to facilitate online filing and to give accurate information relating thereto. We accept that the appellant believed that when he set about trying to send in his self-assessment return on the 15 January 2010, he believed that he would be able to use HMRC's online filing facility, without more. HMRC's advertising material had done nothing to disabuse him of that view or to inform him that in respect of certain specified types of income, specialist software might need to be purchased. In our judgement it is not reasonable to expect a taxpayer to have to procure third-party software, which may or may not be reliable, before being able to use the much advertised online filing facility. If the appellant had been able to file online the software would have carried out an automatic calculation of the tax due. Such calculations are often complex and not necessarily straightforward for the average taxpayer to undertake for himself. In this case the appellant had a state, trust and pension income to be taken into account which resulted in him being unable to use the online filing facility provided by HMRC without going to the trouble and risk of installing third-party software on his computer.

11.    We are entirely satisfied that but for the fact that HMRC's online filing advertisements and information were inaccurate or, at the very least, incomplete, this appellant would not have been misled and so would not have lost the opportunity to file his self assessment return timeously, thus avoiding the surcharge now demanded.

12.    In our judgement it is a reasonable excuse for late payment, for a taxpayer to demonstrate that that lateness has been caused by misleading or inaccurate information being provided to him by the very person who now seeks to levy a surcharge based upon that lateness.

13.    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.

Decision.

Appeal allowed.

TRIBUNAL JUDGE

RELEASE DATE: 2 FEBRUARY 2011