British
and Irish Legal Information Institute
Freely Available British and Irish Public Legal Information
[
Home]
[
Databases]
[
World Law]
[
Multidatabase Search]
[
Help]
[
Feedback]
First-tier Tribunal (Tax)
You are here:
BAILII >>
Databases >>
First-tier Tribunal (Tax) >>
Hoar Cross Parish Council v Revenue & Customs [2011] UKFTT 362 (TC) (19 May 2011)
URL: http://www.bailii.org/uk/cases/UKFTT/TC/2011/TC01217.html
Cite as:
[2011] UKFTT 362 (TC)
[
New search]
[
Printable RTF version]
[
Help]
Hoar Cross Parish Council v Revenue & Customs [2011] UKFTT 362 (TC) (19 May 2011)
INCOME TAX/CORPORATION TAX
Penalty
[2011] UKFTT 362 (TC)
TC01217
Appeal number: TC/2011/01059
P35
return—Penalty for late return (Taxes Management Act 1970 s.98A)—Reasonable
excuse—Appeal dismissed
FIRST-TIER TRIBUNAL
TAX
HOAR
CROSS PARISH COUNCIL Appellant
-
and -
THE COMMISSIONERS
FOR HER MAJESTY’S
REVENUE
AND CUSTOMS Respondents
TRIBUNAL:
DR CHRISTOPHER STAKER (TRIBUNAL JUDGE) IAN
ABRAMS (TRIBUNAL MEMBER)
The Tribunal determined the
appeal on 6 May 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 8 February 2011, and HMRC’s
Statement of Case submitted on 2 March 2011.
© CROWN COPYRIGHT
2011
DECISION
Introduction
1. The
Appellant appeals against a £206 penalty imposed in respect of the late filing
of its P35 employer’s annual return for the tax year 2009/10.
The relevant legislation
2. Regulation
73(1) of the Income Tax (Pay As You Earn) Regulations 2003 imposes on an
employer the obligation to deliver to HMRC a P35 return before the
20th day of May following the end of a tax year. Paragraph (10) of that
regulation provides that Section 98A of the Taxes Management Act 1970 (the “TMA”) applies to paragraph (1) of that regulation.
3. Section
98A of the TMA relevantly provides as follows:
(2) Where
this section applies in relation to a provision of regulations, any person who
fails to make a return in accordance with the provision shall be liable—
(a) to
a penalty or penalties of the relevant monthly amount for each month (or part
of a month) during which the failure continues, but excluding any month after
the twelfth or for which a penalty under this paragraph has already been
imposed, ...
(3) For
the purposes of subsection (2)(a) above, the
relevant monthly amount in the case of a failure to make a return—
(a) where
the number of persons in respect of whom particulars should be included in the
return is fifty or less, is £100, ...
4. Section
100(1) of the TMA authorises HMRC to make a determination imposing a penalty
under s.98A of the TMA in such amount as it considers correct or appropriate.
Section 100B of the TMA provides for an appeal against the determination of
such a penalty. Section 100B(2)(a) provides that in the case of a penalty
which is required to be of a particular amount, the Tribunal may
(i) if it appears ... that no penalty has been
incurred, set the determination aside,
(ii) if the amount determined appears ... to be
correct, confirm the determination, or
(iii) if the amount determined appears ... to be
incorrect, increase or reduce it to the correct amount.
5. Section
118(2) of the TMA provides as follows:
(2) For
the purposes of this Act, a person shall be deemed not to have failed to do
anything required to be done within a limited time if he did it within such
further time, if any, as the Board or the tribunal or officer concerned may
have allowed; and where a person had a reasonable excuse for not doing anything
required to be done he shall be deemed not to have failed to do it unless the
excuse ceased and, after the excuse ceased, he shall be deemed not to have
failed to do it if he did it without unreasonable delay after the excuse had
ceased.
The arguments of the parties
6. The
notice of penalty determination dated 20 September 2010 states that the
Appellant did not file its P35 return for the year 2009/10 by 19 May 2010, that
the penalty under the legislation was £100 per month for every 50 (or up to 50
employees), that the statutory penalty was accordingly £400, but that the
penalty can be mitigated to the total amount of the PAYE, NI and student loan
deductions for the year, so that the penalty in this case was reduced to £206.
7. An
internal HMRC review of the penalty determination dated 10 January 2011 stated
that the HMRC Online Services Team state that there was no online submission of
the P35 return until 15 September 2010, and attached a printout from the HMRC
computer system. The internal review did not accept the Appellant’s
explanation for the late submission.
8. The
Appellant’s case is that the return was submitted on-line in good faith within
the deadline, but that due to some malfunction in HMRC’s systems HMRC failed to
capture it or even record its receipt. The Appellant’s grounds of appeal add
that: “The appellant’s clerk, who submitted the return, cannot say one way or
the other whether an automated acknowledgement was received from HMRC, although
there is now nothing on her computer, she considers it possible that she might
have deleted it. Certainly, had there been any doubt in her mind that she had
indeed correctly submitted the return then of course she would have contacted
HMRC to check, and the fact that she did not is further evidence of her
believing, in good faith, that she had indeed filed the return.” The Appellant
adds that the fact that HMRC records do not record receipt of the return does
not mean that it was not sent, that the matter is therefore not free from
doubt, and that the Appellant should be given the benefit of the doubt. A
reply from the Appellant dated 29 March 2011 adds that computer systems are
fallible, and that while HMRC can say what should have happened, “HMRC cannot
tell us for sure what did happen on this particular occasion”.
9. In
the papers was also a letter from the clerk to the Appellant stating that the
return was submitted by 19 May 2010, that “I recall that a message flashed up
on screen that the submission was successful”, that because of this “I attached
no significance to the fact that I received no confirmatory e-mail”, that “The
current Chairman of [the Appellant] can confirm that I told her at the time
that I had submitted the return”, that until the penalty notice was received
some 4 months later the Appellant was under the impression that the return had
been received, that the former clerk to the Appellant had experienced problems
receiving e-mails from HMRC and that the penalty is disproportionate given that
the Appellant has in fact overpaid tax.
10. The HMRC
statement of case argues that under the relevant legislation, it is mandatory
to deliver the 2009/10 return online, that if not submitted online by 19 May
2010 a penalty will apply, that HMRC is not obligated to issue reminders but
that all employers were in fact sent an Employer Pack in February 2010
explaining employers’ responsibilities, that submission of the return online is
a straightforward process and that “context sensitive help” is available, and
that the Appellant successfully submitted returns online in previous years.
The statement of case adds that the HMRC website gives clear instructions for
filing online and what to expect if the submission is successful. It states
that if submission is successful, a confirmation message is sent, usually
within a minute of filing, and that if the submission is rejected, a message
will also be sent.
The Tribunal’s view
11. The Tribunal
must determine questions of fact on the evidence before it on the basis of the
balance of probability.
12. The Tribunal
finds that an employer does not discharge the responsibility to submit a return
merely by seeking in good faith to submit a return online, if the return is not
received by the HMRC computer system.
13. On the evidence
before it, the Tribunal considers it improbable that the HMRC system would
receive a return without generating a confirmation message, and without the
system recording that the return had been received.
14. On the evidence
before it, the Tribunal is satisfied that no return was received by the HMRC
system within the deadline. The Tribunal is also satisfied on a balance of
probability that no confirmation was sent by the system. Despite the evidence
of the clerk to the Appellant in the letter dated 19 May 2010 that “I recall that a message flashed up on screen that the submission was successful”, the
Tribunal considers it improbable that this occurred in all of the
circumstances.
15. The Tribunal
therefore finds that the return was not submitted by the deadline.
16. On its
consideration of the evidence, the Tribunal considers that even if the
Appellant did attempt in good faith to submit the return online within the
deadline, this attempt was unsuccessful, and that the HMRC computer systems are
designed to make it obvious to users whether the submission of a return has
been successful or not. The Tribunal finds on a balance of probabilities that
if an attempt was made by the Appellant to submit a return online within the
deadline, it should have been apparent to the Appellant at the time that the
attempt had been unsuccessful. The Tribunal therefore finds that a reasonable
excuse for the late submission has not been established.
17. The Tribunal is
satisfied that the penalty imposed is in the correct amount.
Conclusion
18. It follows that
this appeal must be dismissed, and the penalty determination confirmed.
19. 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: 19 MAY 2011
