[2011] UKFTT 196 (TC)
TC01065
Appeal number: TC/2010/09273
INCOME TAX – Surcharges
on unpaid income tax (Taxes Management Act 1970 s.59C) – Whether a reasonable excuse for late payment – Appeal dismissed
FIRST-TIER TRIBUNAL
TAX
MR
SHAMIM AHMED 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 7 December 2010, and HMRC’s
Statement of Case submitted on 18 January 2011.
© CROWN COPYRIGHT
2011
DECISION
Introduction
1. This is an appeal against a two default surcharges
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 30 December 2009 in
respect of the 2004/05 and 2005/06 tax years.
The relevant legislation
2. Section 59B(6) of the TMA states in relevant part as
follows:
(6) Any amount of
income tax or capital gains tax which is payable by virtue of an assessment
made otherwise than under section 9 of this Act shall, unless otherwise
provided, be payable on the day following the end of the period of 30 days
beginning with the day on which the notice of assessment is given.
3. 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 evidence
4. The evidence shows that notices of assessment were issued
to the Appellant in respect of the 2004/05 and 2005/06 tax years on 30 November
2009 (folios 1-4 of the HMRC bundle).
Payment of amounts due pursuant to those assessments was therefore due within
30 days of the notice of assessment, that is, by 30 December 2009, pursuant to
s.59B(5) of the TMA. Each of the notices of assessment included a table
showing how the amounts charged had been calculated. The notices of assessment
stated that “If you have any doubts or do not understand this notice please
contact this office or your local tax office for advice”.
5. There is nothing in the material before the Tribunal to
suggest that the Appellant sought to appeal against the assessments themselves.
6. Surcharges in the amount of 5% of the amount of tax due
for each of the tax years were imposed under s.59C(2) and (3) of the TMA on 16
February 2010 and 11 August 2010 respectively.
7. By a letter dated 15 March 2010, the Appellant indicated
that he wished to appeal against the surcharges imposed on 16 February 2010.
By a letter dated 10 August 2010, HMRC upheld the decision to impose those
surcharges, and advised the Appellant that if he disagreed he could request
HMRC to carry out an independent review of the decision or could continue the
appeal by sending it to the Tribunals Service.
8. On 5 September 2010, the Appellant requested an
independent review of the decision. On the form requesting the review, the
reason why he disagreed with the HMRC assessment was stated to be as follows:
“I do not agree with the tax charged figure, I was not provided with
background relating to how this tax figure was calculated. Please provide a
detailed review of exactly how this tax figure was calculated. I am not liable
for this assessment. This assessment is wrong.”
9. A letter from HMRC to the Appellant dated 9 November 2010
advised him that following the independent review, the decision in the 10
August 2010 letter would be upheld. The letter advised the Appellant of his
right to appeal to the Tribunal.
10. The
Appellant’s notice of appeal to the Tribunal is dated 7 December 2010. His
sole stated grounds of appeal are that “I was not provided with the background
detail relating to how the tax figures were calculated by HMRC, so this
assessment is not a valid assessment”.
11. Upon
its consideration of the material before it, the Tribunal is not persuaded that
the HMRC assessments were legally invalid by reason of failure by HMRC to
provide necessary information to the Appellant.
12. If
the Appellant was dissatisfied with the assessments themselves, there are
avenues by which the Appellant could have challenged them. There is no suggestion
in the material before the Tribunal that he did so. The Tribunal accordingly
proceeds on the basis that the assessments were valid and that the Appellant
was required to pay the amounts assessed by 30 December 2009.
13. The
Tribunal finds that in circumstances where a taxpayer has not challenged an
assessment itself, the taxpayer cannot simply decline to pay the tax on the
ground that the taxpayer is not satisfied as to how the assessment has been
calculated by HMRC.
14. The
Tribunal therefore finds that the Appellant’s claimed lack of understanding as
to how the figures in the assessments were arrived at does not amount to a
reasonable excuse for failing to pay the tax.
15. The
Appellant has not advanced any other circumstance that are said to amount to a
reasonable excuse. The Tribunal therefore dismisses the appeal and confirms the imposition of the surcharges.
16. 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.
DR CHRISTOPHER STAKER
TRIBUNAL JUDGE
RELEASE DATE: 21 MARCH 2011
