First-tier Tribunal (Tax)

[2011] UKFTT 170 (TC)

TC01039

Appeal number: TC/2010/06715

Company tax return ~ penalty for late filing ~reasonable excuse

FIRST-TIER TRIBUNAL

TAX

TROUP CURTIS & CO LTD Appellant

- and -

THE COMMISSIONERS FOR HER MAJESTY’S

REVENUE AND CUSTOMS Respondents

TRIBUNAL: FIONAGH GREEN (TRIBUNAL JUDGE)

The Tribunal determined the appeal on 2 November 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 15 February 2010,  HMRC’s Statement of Case submitted on 20 September 2010 and the Appellant’s Reply dated 18 October 2010.

© CROWN COPYRIGHT 2011

DECISION

This is an appeal dated 15 February 2010 against the flat-rate penalty imposed for the late filing of the Company Tax (CT) return for the accounting period ending 31 December 2008.

The Law

The legislation in so far as is relevant here is found in:

 Finance Act 1998 Schedule 18

(i) Paragraph 3

(1)  HMRC may by notice require a company to deliver a return (a ‘company tax return’)  of such information, accounts, statements and reports –

(a) relevant to the tax liability of the company or

(b) otherwise relevant to the application of the Corporation Tax Acts to the company

as may reasonably be required by the notice

(2) Different information, accounts, statements and reports may be required from different descriptions of company

(3) A company tax return must include a declaration  by the person making the return that the return is to the best of his knowledge correct and complete

(4) The return must be delivered to HMRC not later than the filing date

 (ii) Paragraph 14 –

(1)         The filing date for a company tax return is the last day of whichever of the following periods is the last to end-

(a)         twelve months from the end of the period for which the return is made;……

 (iii) Paragraph 17 –

(1)   A company which is required to deliver a company tax return and fails to do so by the filing date is liable to a flat-rate penalty under this paragraph

it may also be liable to a tax related penalty under paragraph 18

(2)   The penalty is –

(a) £100, if the return is delivered within three months after  the filing date, and

(b) £200, in any other case

Section 118 (2) Taxes Management Act 1988 – a company needs to demonstrate a reasonable excuse which prevented it from meeting its legal obligation to ensure it filed on time its return and supporting accounts.

The evidence

Troup Curtis & Co Ltd (the Company) was incorporated on 1 July 1916.

The CT return for the accounting period ending 31 December 2008 was due no later than 31 December 2009.

The CT return for the accounting period ending 31 December 2008 was not delivered until 11 January 2010 a default period of 11 days.  The Post Office receipt from City of Bath Post Office is dated 9 January 2010.

A phone call and email were made by Mr. David Giles Director of the company to an officer of HMRC City of London area on 31 December 2009. The email gives the company name and address.

Post Office receipt dated 9 January 2010 from City of Bath Post Office.

HMRC have no records of a conversation with an officer for HMRC in which information was given to any person on behalf of the Appellant to inform them that there would be a period of grace for filing the CT of seven working days.

The Facts

From the evidence I make the following findings of fact -

 Agreed facts

A notice to file for the specified period 1 January 2008 to 31 December 2008 was issued on 19 January 2009.  The company was legally bound to deliver a complete return to HMRC by the filing date which was 31 December 2009.

The CT return for the accounting period ending 31 December 2008 was 11 days late.

 Disputed facts

Whether –

(a) a telephone call between an officer of HMRC gave information to Mr. Giles on behalf of the Appellant that there would be a period of 7 working days grace for the filing of the CT return

(b) the extra period allowed as an extra statutory concession is 7 working days or within 7 days after the filing date

 The Submissions of the Parties

The Appellant’s submissions -

The CT return was posted on 9 January 2010 and received by HMRC on 11 January 2010.

A period of 7 working days grace after the deadline of 31 December 2009 was allowed and that delivery to HMRC was within that period.

Mr. David Giles Director of Troup Curtis rang HMRC City of London area on 31 December 2009 and spoke to  Mr. Iqbal Sher whom he found helpful and  was informed there was a 7 day period of grace and was told that this was 7 working days and therefore understood that he had until 12 January 2010 to deliver the CT return. Mr. Giles sent an email to Mr. Sher on 31 December 2009 giving details of the company tax reference number and address.

There was a reasonable excuse for the late filing of the CT return.

HMRC’s submissions -

Extra Statutory Concession B46 states that a return will not be treated as late if it is received within the extra period allowed under the concession.  The extra period is the period to the end of the last business day within 7 days after the filing date.  The ESC is not an extension of the statutory time limit but is to allow for situations where returns would normally have been received by the due filing date are delivered a few days afterwards, a postal delay being an example.

The filing date was 31 December 2009 and the extra period allowed under ESC B46 was until 7 January 2010.

HMRC have no records to substantiate that Mr. Giles was told that the period of grace was 7 working days.

The return was not received until 11 January 2010 which is after both the filing date and ESC period therefore the penalty was correctly imposed.

That there was no reasonable excuse for late filing which existed throughout the whole period of default.

That the completion and delivery of the CT return was entirely within the control of the company and nothing exceptional prevented the company from doing so by the filing date.

Discussion

There is no dispute between the parties that the CT return for the accounting period ending 31 December 2008 was not delivered until 11 January 2010.  The company was legally bound to deliver a complete return by the filing date of 31 December 2009.  The CT return was sent to HMRC from the City of Bath Post Office  on 9 January 2010. 

HMRC have no record of a telephone call with Mr. Iqbal Sher or any other officer of HMRC regarding information that there would be 7 working days grace for the submission of the CT return.  Mr. Giles provided evidence of an email to HMRC on 31 December 2009 which gave details of the company name, tax reference number and address for communication but did not make any reference to the filing date or the 7 days grace.

It is the responsibility of the company to ensure that it complies with its tax obligations and that the returns are filed by the correct dates.  A company tax return must be filed on or before its filing date.

Although the evidence of the Appellant was that there  was contact with HMRC by telephone call and by email on 31 December 2009,  it  was not accepted that Mr. Giles  was informed that an extension period would be seven working days.  The Extra Statutory Concession states that a return will not be treated as late if it is received within the extra period allowed under the concession which is the period to the end of the last business day within the seven days after the filing date.  The Extra Statutory Concession  is to allow for situations where returns would normally have been received by the due filing date but are delivered late due to postal delay although HMRC also may accept returns posted and received within the concession period.  This is not the case here where the CT return was not received until 11 January 2010.  The filing date was 31 December 2009 and the extra period allowed under the Extra Statutory Concession would be until 7 January 2010.

The email to HMRC on 31 December 2009 makes no reference to the 7 days grace or statutory concession or to any filing or posting date.

A reasonable excuse is not defined in the legislation and the term must be given its normal everyday meaning.  There was no exceptional event preventing the CT return from being filed by the due date.  A reasonable excuse for late filing must have existed throughout the whole period of default.

Conclusion

Having carefully considered all of the evidence it was decided that the flat-rate penalty for the late filing of the Company Tax return for the accounting period ending 31 December 2008 was correctly imposed and that there was no reasonable excuse for the late filing;  there was no exceptional event beyond the Appellant’s control which prevented the return from being filed by the due date of 31 December 2009.  The concession is the period to the end of the last business day within 7 days after the filing date.  The return was not filed within the concession period which was until 7 January 2010.  The completion and delivery of the CT return was entirely within the control of the company and there was nothing exceptional which prevented the company from delivering the CT return by the filing date. The return was not received until 11 January 2010 which is after both the filing date and the Extra Statutory Concession period and the flat-rate penalty of £100 was correctly imposed. The penalty is also proportionate. The appeal therefore fails.

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.

TRIBUNAL JUDGE

RELEASE DATE: 15 MARCH 2011