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You are here: BAILII >> Databases >> First-tier Tribunal (Tax) >> Sanguinetti (t/a A S Construction) v Revenue & Customs [2011] UKFTT 389 (TC) (10 June 2011)
URL: http://www.bailii.org/uk/cases/UKFTT/TC/2011/TC01244.html
Cite as: [2011] UKFTT 389 (TC)
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Andrew Sanguinetti t/a A S Construction v Revenue & Customs [2011] UKFTT 389 (TC) (10 June 2011)
INCOME TAX/CORPORATION TAX
Penalty

[2011] UKFTT 389 (TC)

TC01244

 

 

Appeal number: TC/2010/07015

 

Late payment surcharge – Whether reasonable excuse on the facts – No – Appeal dismissed – Section 59C Taxes Management Act 1970

 

 

FIRST-TIER TRIBUNAL

 

TAX

 

 

ANDREW SANGUINETTI

T/A A S CONSTRUCTION Appellant

 

 

- and -

 

 

THE COMMISSIONERS FOR HER MAJESTY’S

REVENUE AND CUSTOMS Respondents

 

 

 

 

TRIBUNAL: JOHN BROOKS (TRIBUNAL JUDGE)

 

The Tribunal determined the appeal on 4 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 4 October 2010 and HMRC’s Statement of Case submitted on 7 October 2010.

 

 

 

 

© CROWN COPYRIGHT 2011

DECISION

 

1.       This is an appeal by Mr Andrew Sanguinetti, who trades as A S Construction, against a late payment surcharge in the sum of £72.03 imposed by HM Revenue and Customs (“HMRC”) under s 59C of the Taxes Management Act 1970 (“TMA”) following the late payment of tax for 2008-09.

2.       Having considered the papers provided by both parties, a Decision Notice dismissing the appeal and containing a summary of the Tribunal’s findings of facts and reasons for the decision was released on 8 April 2011. On 28 April 2011, following receipt of the Decision Notice, Mr Sanguinetti wrote to the Tribunal requesting full written findings and reasons as he wished to appeal against the decision.

Evidence

3.       The evidence before the Tribunal was contained in the following documents:

(1)        The Notice of Appeal dated 4 October 2010.

(2)        HMRC’s Statement of Case submitted on 7 October 2010.

(3)        The following documents attached to the Statement of Case:

(a)        Calculation of tax due for 2008-09;

(b)        Mr Sanguinetti’s appeal to HMRC dated 3 April 2010;

(c)        HMRC’s acknowledgement of appeal dated 6 May 2010;

(d)        HMRC’s decision letter dated 12 July 2010;

(e)        Mr Sanguinetti’s request, dated 16 July 2010, for a review of HMRC’s decision;

(f)         Conclusion of Review letter from HMRC dated 27 August 2010;

(g)        Notice of Appeal dated 4 October 2010;

(h)        Copy of tax calculation page from 2008-09 return;

(i)         Copy statement of account issued by HMRC on 8 December 2010;

(j)         Copy of HMRC’s online advice “What to do if you can’t pay your tax bill”; and

(k)        Copy of HMRC’s online guidance regarding payment deadlines and the consequences of missing those deadlines.

Facts

4.       On the basis of this evidence I make the following findings of fact:

(1)        As his trading name of A S Construction suggests, Mr Sanguinetti works in the construction industry. However, due to the effect of the recession on the industry he did not work between April 2009 and February 2010.

(2)        On 6 April 2009 HMRC issue Mr Sanguinetti with a self-assessment tax return. This was due to be filed by 31 October 2009, if a paper return, or 31 January 2010 if filed online. Mr Sanguinetti filed the return, and included a self-calculation of the tax due, online on 15 September 2009.

(3)        When filing the return online he would have received an automatic calculation, and therefore been aware that his tax liability for 2008-09 was £1,440.72 which was due to be paid by 31 January 2010.  

(4)        Due to his lack of work Mr Sanguinetti was unable to pay the tax by the due date but did so on 22 March 2010 following the commencement of work for which he received interim payments.

(5)        As the tax had not been paid by the due date of 31 January 2010 HMRC issued a surcharge notice in the sum of £72.03 being 5% of £1,440.72.

(6)        This appeal is against that surcharge.

Law

5.       Section 59C TMA provides that where tax remains unpaid 28 days after the due date for payment a taxpayer is liable to a surcharge equal to 5% of the unpaid tax. However, The Tribunal may set aside a surcharge if it appears that the taxpayer had a reasonable excuse for not paying the tax throughout the period of default but if there does not appear to be a reasonable excuse the surcharge will be confirmed. “Reasonable excuse” which is not defined in the legislation “is a matter to be considered in the light of all the circumstances of the particular case” (see Rowland v HMRC [2006] STC (SCD) 536 at [18]).

6.       Although s 59C(10) TMA provides that an inability to pay “shall not be regarded as a reasonable excuse” as a result of the decision of the Court of Appeal in Customs and Excise Commissioners v Steptoe [1992] STC 757, which considered a similar provision in the VAT legislation, it is necessary to consider the underlying causes of the inability to pay to determine whether there is a reasonable excuse for the default.

Submissions

7.       In his Notice of Appeal Mr Sanguinetti states:

I agree that the proposed tax for 2008-09 was paid late, although only 23 days over the 28 day allowance past 31 January 2010.

It’s not the amount £72.03! but the principle, as I have explained … we were not working [between April 2009 and February 2010] due to the recession. And I am sure it has cost myself and HMRC more than £72.03 in time dealing with this matter.

I feel that HMRC are being heavy handed asking for this surcharge, and some allowance and common sense should be made for the slowdown especially on the Building sector. As we have no objection [to] paying the tax due we feel that the “surcharge” is too much and think that HMRC have been told by the government to get all taxes and as much as possible, any way possible.

8.       HMRC, in their Statement of Case explain that a surcharge is intended to encourage prompt payment and is only imposed on late payment of tax. It is contended that in the absence of any reasonable excuse in this case the surcharge was properly imposed as the tax was due on 31 January 2010 but not received by them until 23 March 2010, more than 28 days after the due date. They also refer to the online guidance available to a taxpayer who is unable to meet a tax liability and point out that such a taxpayer may avoid a liability to a surcharge if he makes a formal payment proposal to HMRC on or before the surcharge trigger date.

Discussion and Conclusion

9.       The liability to a surcharge arises when tax has not been paid within 28 days of the due date. In this case, as Mr Sanguinetti accepts, the tax was not paid within 28 days of the due date and therefore the surcharge, which may only be set aside if there was a reasonable excuse for the late payment, was properly imposed.

10.    Given that there is an automatic calculation of tax on filing a tax return online Mr Sanguinetti who filed his tax return online on 15 September 2009, would, in my judgment, have been aware of both the amount of tax due and the due date for payment of the tax. Also, as someone who had filed his self-assessment tax return online he would have known of the existence of HMRC’s website and should have been aware of how to use it to obtain advice as he must have realised at that time that he would experience difficulties in meeting his tax liability as he had already been without work since April 2009. He therefore had ample opportunity to contact HMRC with proposals for payment of the tax, which may have prevented the surcharge being imposed, but did not do so.

11.    In the circumstances, having taken account of the underlying causes of his inability to pay the tax on time which is itself specifically precluded from being a reasonable excuse by s 59C(10) TMA, I am unable to find that Mr Sanguinetti has a reasonable excuse for the late payment of his tax for 2008-09. The appeal is therefore dismissed and surcharge confirmed.

12.    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.

 

 

JOHN BROOKS

 

TRIBUNAL JUDGE

RELEASE DATE: 10 JUNE 2011

 

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