First-tier Tribunal (Tax)

[2011] UKFTT 257 (TC)

TC01121

Appeal number: TC/2011/00459

P35; On line filing; receipt of; issue of fact; burden and standard of proof.

FIRST-TIER TRIBUNAL

TAX

BALLYSILLAN COMMUNITY FORUM Appellant

- and -

THE COMMISSIONERS FOR HER MAJESTY’S

REVENUE AND CUSTOMS Respondents

TRIBUNAL: GERAINT JONES Q.C. (TRIBUNAL JUDGE)

The Tribunal determined the appeal on 14 April 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 12 January 2011 and  HMRC’s Statement of Case submitted on 16 February 2011.

© CROWN COPYRIGHT 2011

DECISION

1.       On the 27 September 2010 HMRC issued a penalty notice, in the sum of £400, to  Ballysillan Community Forum, the appellant, on the basis that it alleged that the appellant had not filed a P35 by the 19th May 2010. A second penalty notice was issued on the 29 September 2010 in the sum of £100. The appellant has appealed against each. This is not a "reasonable excuse" case. The issue is quite different. The appellant's case is that it did file the P35, using an online filing facility on the 26 April 2010.

2.       Thus, this appeal raises a straightforward issue of fact - was the necessary filing undertaken or not.

3.       I have to bear in mind that this is a case in which a penalty has been levied. In those circumstances the decision of the European Court of Human Rights in Jusilla v Finland (73053/01) ECtHR (Grand Chamber) is highly material. The Court decided that a penalty or supplement charged by the revenue authorities of a member country is in the nature of a criminal penalty and thus any proceedings in respect of it attract the provisions of article 6 ECHR (right to a fair trial). Thus, in my judgement, it is for HMRC to satisfy me to the criminal standard, so that I can be sure, that the required filing did not take place.

4.        HMRC faces the difficulty that it has filed no evidence. Its Case Statement is not evidence although, very often, a Case Statement will contain factual information that is agreed or, in any event, not in dispute. The nearest that HMRC comes to providing any evidence is in a redacted document where HMRC has chosen to delete the identity of the maker of that document. Thus, the evidential status and weight of that document is, in my judgement, much diminished. In any event, the document is designed to deal with the evidence put in by the appellant by saying that the precise form of words referred to by the appellant's witnesses would not have been generated by the online filing facility.

5.       The case for HMRC is, in effect, that computers do not get it wrong and that as its computer system does not have the necessary P35 filing within it, such filing cannot have taken place and the appellant cannot have been informed that it had successfully filed the required P35. That demonstrates a touching faith in computers.

6.       The evidence relied upon by the appellant comes from three ladies working for or at the appellant organisation. The first witness is Mrs Dale Hamilton who says that on the 26 April 2010, at 15:00 hours, she submitted the online submission and, at the end of the process, received a message thanking her for and acknowledging the submission. The next witness is Charlene Crilly who in her written evidence, dated the 12 January 2011, says that she was present with Mrs Harrison and witnessed her complete and submit the P35 online. She also says that after it was submitted she saw a confirmation screen acknowledging the return and expressing thanks for it. It is to that very latter issue that the redacted document, to which I have referred above, is said to be germane.  The next witness is Ciara Ponise whose written evidence is set out in her letter of 12 January 2011. She gives like evidence.

7.       My task is straightforward. I have to decide whether HMRC has proved so as to make me sure that the necessary filing did not take place. It seeks to persuade me of that by, inferentially, claiming that computers never get it wrong. I have no hesitation in rejecting that proposition and I equally have no hesitation in accepting the truthfulness of the witnesses on behalf of the appellant. There is, of course, the possibility that although those witnesses may be honest, they may nonetheless be mistaken. If it is to be said that they are mistaken, there would need to be evidence to persuade me that that is so. I do not consider the mere assertion by HMRC that it has not received the P35 to be sufficient evidence to lead me to conclude that these witnesses are each mistaken.

8.       Thus, as I accept the evidence that the P35 was submitted online, notwithstanding that, for whatever reason, it may not have become lodged or located in HMRC’s computer.

9.        It follows that this appeal must succeed in full.

10.    I should add that, in my judgement, it is a direct consequence of the decision of the European Court of Human Rights, referred to above, that the onus in this appeal has been upon HMRC to satisfy me, so as to make me sure, that the P35 was not received by it. As the European Court has decided that a penalty levied by HMRC is in the nature of a criminal penalty, it follows that the standard of proof must be to the appropriately high criminal standard. In the instant case I make it clear that my decision does not rest upon any nicety relating to the standard of proof. I make it clear that I accept the evidence given by the appellant's witnesses and even if it had been for HMRC to persuade me, only on the balance of probabilities, that the P35 had not been received, it would have failed to do so.

11.    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.