First-tier Tribunal (Tax)

[2011] UKFTT 195 (TC)

TC01064

Appeal number: TC/2010/09272

Construction Industry Scheme—Penalty for late return (Taxes Management Act 1970 s.98A)—Reasonable excuse—Appeal dismissed

FIRST-TIER TRIBUNAL

TAX

EXPO DECOR LTD Appellant

- and -

THE COMMISSIONERS FOR HER MAJESTY’S

REVENUE AND CUSTOMS Respondents

TRIBUNAL: DR CHRISTOPHER STAKER (TRIBUNAL JUDGE) DR MICHAEL JAMES (TRIBUNAL MEMBER)

The Tribunal determined the appeal on 10 March 2011 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 1 December 2010, and HMRC’s Statement of Case submitted on 20 January 2011.

© CROWN COPYRIGHT 2011

DECISION

1.       This is an appeal by the Appellant against the imposition of a £100 penalty under s.98A of the Taxes Management Act 1970 (the TMA) in respect of the late filing by the Appellant of his CIS return for the period ending 5 June 2010. 

2.       The deadline for its filing was 19 June 2010.  HMRC states that it received the return late on 22 June 2010, the period of default thus being 3 days.  The Appellant claims in a letter dated 3 August 2010 that “the return is sent within a day or two around the same time each month” and that “I have in recent months experienced two late arrivals of these ‘larger’ type letters”.  HMRC states that on a previous occasion it accepted a similar appeal by the Appellant, in relation to the period ended 5 September 2009, and at that time sent the Appellant a letter informing him that any further appeals raising postal issues would require proof of postage.  In the circumstances, it is regrettable that the Appellant did not obtain proof of postage. 

3.       If a CIS return is submitted late and a late filing penalty is imposed, the burden of proof is on the contractor to establish a reasonable excuse.  However, the contractor is only put in the position of having to establish a reasonable excuse if the return was indeed submitted late.  The initial burden of proof is on HMRC to establish that the return was submitted late.  It is only if HMRC discharges this burden, on a balance of probabilities, that the burden then shifts to the Appellant to establish a reasonable excuse.

4.       The HMRC statement of case states at page 4 that: “HMRC’s CIS system records show that in this case the return was issued on 23 May 2010.  The due date was 19 June 2010 and the return was received late on 22 June 2010 and processed on 28 June 2010. (Folios 1, 10 and 11).”  The reference to “folios” is to page numbers of the bundle accompanying the HMRC statement of case.  Folios 1 is a printout from the HMRC CIS database showing that the return in question was received on 22 June 2010.  Folios 10-11 are further printouts from the HMRC CIS database showing that a “pre-populated return” for the June 2010 period was issued on 23 May 2010, and that the return was processed on 28 June 2010. 

5.       The Appellant has not provided any evidence of the date of posting of the return.  Nor has the Appellant given any precise details of the time of posting of the return, but has stated merely that “the return is sent within a day or two around the same time each month”.  The Appellant states in his letter that he has had previous experiences of large letters being delayed in the mail, and has not disputed that HMRC have on a previous occasion sent him a letter advising that he should have proof of postage in any future case where he relies on postal delays as a reasonable excuse for lateness.

6.       The Tribunal accepts that HMRC cannot require the Appellant to have proof of postage.  However, in the absence of proof of postage, the Tribunal can only take into account the evidence before it.  Given the specific evidence from HMRC as to the date of receipt of the return, the Tribunal is satisfied that it was received by HMRC three days after the deadline.  In the absence of any evidence from the Appellant as to the date of posting of the return, and in the absence even of any specific information from the Appellant as to the date that he says it was posted, the Tribunal was not satisfied that it was posted at time at which it could reasonably be expected to have been received by HMRC through the mail within the deadline.  The Tribunal therefore find that the return was submitted late, and it is not satisfied that the lateness was due to a postal delivery time that was longer than could reasonably have been expected.  The Tribunal does not accept that there were postal delays establishing a reasonable excuse.  The Appellant has not advanced any other circumstance said to amount to a reasonable excuse.  It follows that this appeal must be dismissed, and the penalty determination confirmed.

7.       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.