Mr Melvin Jeffrey Crump v Revenue & Customs [2011] UKFTT 552 (TC) (17 August 2011)
[2011] UKFTT 552 (TC)
TC01397
Appeal number: TC/2010/08670
INCOME TAX – Surcharges
on late payment of income tax (Taxes Management Act 1970 s.59C) – Whether a reasonable excuse for late payment – Appeal dismissed
FIRST-TIER TRIBUNAL
TAX
MR
MELVIN JEFFREY CRUMP Appellant
-
and -
THE
COMMISSIONERS FOR HER MAJESTY’S
REVENUE
AND CUSTOMS Respondents
TRIBUNAL: DR CHRISTOPHER STAKER (TRIBUNAL JUDGE) MRS
SUSAN LOUSADA (TRIBUNAL MEMBER)
The Tribunal determined the
appeal on 31 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 6 November 2010, and HMRC’s
Statement of Case dated 14 December 2010, and other papers in the case.
© CROWN COPYRIGHT
2011
DECISION
Introduction
1. This is an appeal against a default surcharge 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 31 January 2010 in respect of the
2008/09 tax year.
2. This matter is now being decided following a decision of
Tribunal Judge Peter Kempster dated 26 April 2011, setting aside an earlier
decision of the Tribunal pursuant to Tribunal Procedure Rule 38.
The relevant legislation
3. 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.
4. 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 arguments of the parties
5. The HMRC statement of case states that the tax liability
for that year was £4,507.86, and that on 31 January 2010 there was an unpaid
balance of £3650.86, which was not paid in full until 28 April 2010. A default
surcharge of £182.54 was imposed pursuant to s.59C of the TMA on 1 April 2010,
and the notice was issued to the Appellant some time thereafter.
6. The Appellant has not taken issue with the fact of the
late payment or the amount of the surcharge in the event that there is no
reasonable excuse for the late payment. The Appellant’s case is that he has a
reasonable excuse for the late payment, for purposes of s.59C(9).
7. In a request dated 15 September 2010 for review by HMRC
of the decision to impose the surcharge, the Appellant stated that he went
through a divorce that commenced in December [presumably 2009] at Chelmsford
County Court, with the decree nisi being issued on 8 September [presumably
2010]. It stated that divorce is a very traumatic event, that “Everything that
I should have attended to suffered through this period, not just HMRC, and that
the Appellant has never before been late in making a payment.
8. On 27 October 2010, following the review, HMRC upheld the
original decision.
9. In his notice of appeal to the Tribunal, the Appellant
states by way of grounds of appeal that his circumstances met the criteria of a
reasonable excuse, that his personal circumstances were “sudden and unexpected
and continued over the entire period [of default]”, and repeats the points made
in his 15 September 2010 request for review of the decision.
10. The
HMRC statement of case states amongst other matters as follows. HMRC’s records
show that there was some level of administration in place from December 2009 to
September 2010, as the Appellant filed his 2008/09 tax return online on 19
January 2010, and chose to calculate his liability and therefore knew the sum
to be paid by the due date, that there were documents attached to the return,
that the Appellant had an agent acting on his behalf, that there is no evidence
that the Appellant ever attempted to contact HMRC prior to the surcharge
trigger date to explain the circumstances, which it would have been reasonable
for the Appellant or his agent to have done.
11. In
a reply to the HMRC statement of case sent by e-mail on 4 January 2011, the
Appellant states that it is not true that he was dealing with his tax return by
submitting his return online, that his agent was dealing with his tax returns
from information provided prior to December 2009, and that his tax was paid
just under three months late, when it took HMRC a month to acknowledge his
appeal and 4 or 5 months to comment on his appeal.
The Tribunal’s view
12. The Tribunal
must determine questions of fact on the evidence before it on the basis of the
balance of probability. The burden is on the Appellant to establish
circumstances that would amount to a reasonable excuse.
13. There
is no definition in the legislation of what constitutes a “reasonable excuse”
for purposes of s.59C of the TMA. In the context of the present case, the
Tribunal understand the expression to refer to a situation where a diligent
taxpayer (that is, a taxpayer who is not seeking to avoid or be dilatory in his
tax obligations), has done everything that could reasonably be expected in the
circumstances. It “is a matter to be
considered in the light of all the circumstances of the particular case” (see LaMancha Limited v HMRC [2010] UKFTT 638 (TC)
at [13], quoting Rowland v HMRC [2006] STC (SCD) 536 at [18]).
14. The Tribunal accepts that a
divorce can be a traumatic experience. However, it does not accept that a
divorce of itself renders it not reasonably possible for a person to comply
with their obligations to pay income tax on time. The Tribunal does not rule
out that on the particular facts of a specific case, divorce proceedings might
be such as to amount to a reasonable excuse for late payment of income tax.
However, that would depend on the specific facts of the case, which would need
to be established by evidence. It would not be sufficient for the Appellant to
establish merely that he was going through divorce proceedings at the time. It
would be necessary to establish particular circumstances which made it unreasonable
to expect him to comply with the obligation to pay tax throughout the period of
default.
15. No particulars are given by
the Appellant of specific circumstances that made it not reasonably possible
for him to pay the tax throughout the period of default, beyond the general
statement that he was going through a traumatic divorce. His grounds of appeal
contain a generalised statement that “A divorce is a very traumatic event which
affects us in a variety of ways, especially after 25 years”, that “We stop
eating, taking care of ourselves, neglecting every day chores as they seem
trivial”, and that “Work suffers, incomes reduce as my accounts show and things
back up as you are not in the right frame of mind to deal with them”.
16. The Tribunal finds that such
generalised statements, unsupported by documentary evidence, are insufficient
to establish a reasonable excuse. The Appellant has not provided documentary
evidence or further particulars to show objectively to what extent his ability
to work and to function was affected by his divorce proceedings. Indeed, no
evidence was even provided that the Appellant in support of his statement that
he was going through divorce proceedings at the time.
17. The Tribunal finds that generalised
statements of the kind in the Appellant’s request for review and grounds of
appeal, without further particulars and supporting evidence, cannot be
sufficient to establish a reasonable excuse.
18. The
Tribunal therefore finds that the Appellant does not have a reasonable excuse
for the late payment of the tax throughout the period of default, for purposes
of s.59C(9) of the TMA.
19.
Conclusion
20. For
the reasons above, the Tribunal dismisses the appeal and confirms the imposition of the surcharge.
21. 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: 17 August 2011
