[2011] UKFTT 139 (TC)

TC001013

Appeal number TC/2010/08006

INCOME TAX – Surcharge on unpaid income tax (Taxes Management Act 1970 s.59C) – Whether a reasonable excuse for late payment – Appeal dismissed

FIRST-TIER TRIBUNAL

TAX

MR MARTIN SLOOTS Appellant

- and -

THE COMMISSIONERS FOR HER MAJESTY’S

REVENUE AND CUSTOMS Respondents

TRIBUNAL: Dr Christopher Staker (Tribunal Judge)

MS JANE SHILLAKER (Tribunal Member)

Sitting in public in Reading on 16 February 2011

The Appellant in person

Mr Paul Maffia for the Respondents

DECISION

Introduction

1.     This is an appeal against a default surcharge imposed pursuant to s.59C of the Taxes Management Act 1970 (the “TMA”) in respect of the late payment by the Appellant of tax due on 31 January 2010 in respect of the 2008/09 tax year.

The relevant legislation

2.     Section 59C of the TMA states in relevant part as follows:

(1) This section applies in relation to any income tax or capital gains tax which has become payable by a person (the taxpayer) in accordance with section 55 or 59B of this Act.

(2) Where any of the tax remains unpaid on the day following the expiry of 28 days from the due date, the taxpayer shall be liable to a surcharge equal to 5 per cent of the unpaid tax.

(3) Where any of the tax remains unpaid on the day following the expiry of 6 months from the due date, the taxpayer shall be liable to a further surcharge equal to 5 per cent of the unpaid tax.

...

(5) An officer of the Board may impose a surcharge under subsection (2) or (3) above; and notice of the imposition of such a surcharge—

(a) shall be served on the taxpayer, and

(b)  shall state the day on which it is issued and the time within which an appeal against the imposition of the surcharge may be brought.

...

(7) An appeal may be brought against the imposition of a surcharge under subsection (2) or (3) above within the period of 30 days beginning with the date on which the surcharge is imposed.

...

(9) On an appeal under subsection (7) above that is notified to the tribunal section 50(6) to (8) of this Act shall not apply but the tribunal may—

(a) if it appears that, throughout the period of default, the taxpayer had a reasonable excuse for not paying the tax, set aside the imposition of the surcharge; or

(b)  if it does not so appear, confirm the imposition of the surcharge.

(10) Inability to pay the tax shall not be regarded as a reasonable excuse for the purposes of subsection (9) above.

...

(12) In this section—

“the due date”, in relation to any tax, means the date on which the tax becomes due and payable;

“the period of default”, in relation to any tax which remained unpaid after the due date, means the period beginning with that date and ending with the day before that on which the tax was paid.

The hearing, evidence and arguments

3.     At the hearing, the Appellant appeared in person.  HMRC were represented by Mr Maffia.

4.     The Appellant gave evidence as follows.  The basis of his appeal is that set out in his letter dated 18 April 2010 to HMRC, contained at tab B1 of the HMRC bundle.  He is a willing taxpayer. However, he had serious problems understanding how tax calculations were made when doing his tax return online. The computer screens do not indicate exactly what needs to be paid because they do not take into account payments that have been made on account. Previously, when submitting paper returns, he received a paper document setting everything out, giving a breakdown of the figures. H e could previously calculate what was owing with a degree of accuracy.

5.     Approximately six months before the due date, he received a letter from an HMRC official called Mr Fleming, asking for payment of a total amount of about £12,000 or so.  The Appellant does not recall what deadline that letter indicated for payment.  That letter came with no bank giro slip and no breakdown of the figures.  It simply demanded payment of a sum without indicating what it was for.  The Appellant called Mr Fleming within a few days to ask what the amount was for.  Mr Fleming advised him to call the HMRC helpline.  He called the HMRC helpline within a few days, and was informed that he would be sent a statement.  When he received no statement, he called the helpline again a few weeks later, and was again told that he would receive a statement, but did not.  HMRC has not denied that these telephone calls were made, and presumably HMRC has records of them, but has not produced those records.

6.     The Appellant did not have computer generated statements available to him although he subsequently realised that he could have accessed them online.  Despite having made three calls to HMRC, nobody told him that a 5% surcharge would apply if he paid late, or that the statements were accessible online.  Nor did any documentation warn him in advance that a surcharge would be applicable and he was truly astonished when he received notice of the 5% surcharge.  Had he been told in advance of the surcharge, it would have focused his mind.  In the circumstances it is unreasonable for a surcharge to apply without warning.

7.     The Appellant is old-fashioned and writes cheques. He just wanted a simple breakdown of the figures. He sent a cheque when he received notice of the first of the surcharges.  Having gone through the exercise he is now more familiar with how the system works and will not make the same mistake again.

8.     In response to questions from the Tribunal, the Appellant said that he thought that this was the second year that he had filed his return online. He did a manual tax calculation for the first one.

9.     In his submissions, Mr Maffia said that the self-assessment scheme puts responsibility on the taxpayer to know the amount due and to pay on time. There are contact centres at HMRC which can assist the taxpayer, even if they were not as helpful as the Appellant would have liked them to be.  HMRC contends that the Appellant filed his tax return online on time, and that the amount of tax due was a simple calculation from the information available to the Appellant.  When the Appellant filed the tax return online, the total amount of tax due was immediately indicated.  All that the Appellant was required to do was deduct the amount of the payment on account that he had already made, which would have been indicated on the statements issued to him or viewable online. 

The Tribunal’s views

10.  The Tribunal has considered all of the evidence and submissions before it as a whole.  Failure to mention a particular item of evidence or submission does not mean that the Tribunal has not considered it.

11.  The Tribunal accepts that the Appellant may genuinely have felt uncertain as to the precise amount of tax owing, and may genuinely have called HMRC on the three occasions he referred to without receiving the assistance he was seeking.

12.  However, the Tribunal also accepts the HMRC submission that the self-assessment scheme puts responsibility on the taxpayer to know the amount due and to pay on time.  There are a very large number of persons who are required to submit tax returns and make payments of tax, numbering perhaps in the millions.  While HMRC may do its best to make the necessary information available to taxpayers in an understandable way, different taxpayers will have their own individual preferences as to how they wish to receive information.  It may not be possible for HMRC to satisfy the individual preferences of every taxpayer.  The result may be that some taxpayers feel that obtaining and understanding the information is a matter of some inconvenience or at times even frustration to them.  However, the system would become unworkable if every taxpayer were relieved of the obligation to pay tax until they received information from HMRC in a form convenient to them.

13.  Even if the information available to the Appellant was not in a form that was convenient to him, the Tribunal is satisfied that sufficient information was made available to him by HMRC, both through general public information and through documents sent specifically to him, to put him in a position to obtain the necessary information to enable him to pay the correct amount of tax on time if he had applied himself diligently to obtaining that information.  The making of a request to HMRC to send him a detailed statement did not relieve him of the obligation to pay the tax until such time as he had received such a statement from HMRC.

14.  Mr Maffia pointed to documents in the bundle that would have been sent to the Appellant before the deadline, advising that a surcharge may be imposed if the tax is not paid on time.  The Tribunal considers that in any event, the fact that a taxpayer is unaware of the surcharge would not be a reasonable excuse for late payment.  The obligation to pay the tax exists whether or not late payment might incur a surcharge. 

15.  The Tribunal therefore finds that the Appellant does not have a reasonable excuse for the late payment of the tax throughout the period of default, for purposes of s.59C(9) of the TMA. 

Conclusion

16.    For the reasons above, the Tribunal dismisses the appeal and confirms the imposition of the surcharge.

17.    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.

Christopher Staker

TRIBUNAL JUDGE

RELEASE DATE:  24 FEBRUARY 2011