[2011] UKFTT 557 (TC)
TC01402
Appeal number: TC/2011/01114
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
ADRIAN LANGAN 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 8 February 2011, and HMRC’s
Statement of Case dated 8 March 2011, and other papers in the case.
© CROWN COPYRIGHT
2011
DECISION
Introduction
1. This is an appeal against a default surcharge of £324.28 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.
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 arguments of the parties
4. The HMRC statement of case states the following facts
which have not been disputed by the Appellant. His 2008/09 return showed a tax
liability of £6,485.54. The tax liability was due to be paid on or before 31
January 2010. The tax liability was paid on 28 August 2010. HMRC issued a
first and second surcharge notice on or a few days after 17 September 2010.
Each surcharge was in the amount of £324.28, calculated at 5% of £6,485.64
which was the amount of liability outstanding at both the first surcharge
trigger date of 28 February 2010 and the second surcharge trigger date of 31
July 2010.
5. In a letter to HMRC dated 18 October 2010, the Appellant
indicated that he wished to appeal against both of these surcharge liability
notices. In that letter, the Appellant acknowledged that his 2008/09 tax
return had been filed late, and that he only paid his tax liability in August
2010. However, he considered that the scale of the surcharge was excessive.
6. In his notice of appeal, in the grounds for appeal, the
Appellant states that he now seeks to appeal against the second of the two
surcharge liability notices only. The grounds for appeal refer to the reasons
given in the Appellant’s 18 October 2010 letter, as well as in the Appellant’s
request for review of the decision by HMRC, dated 17 December 2010.
7. The grounds for appeal against the second surcharge
liability notice are in particular the following. The Appellant submitted his
tax return, albeit late, on 31 May 2010. He was awaiting a statement of
liability from HMRC to pay the tax due. Had he paid by 31 July 2010, he would
not have incurred the second default surcharge. HMRC sent the Appellant a
notification dated 14 July 2010, advising him that he needed to resubmit his
return as he had not submitted all information in the required form. Had the
Appellant been residing in the UK, he would have received this notification
earlier, and would have been in a position to pay the amount of tax he owed
before the date on which the second surcharge was levied. However, he did not
receive the notification until 4 August 2010. He replied to it with the
information in the correct form promptly on 6 August 2010. It was only on 27
August 2010 that he then received from HMRC his statement of liability dated 14
August 2010. He again responded promptly by sending a cheque on the same day.
8. The Appellant further contends that he provided all the
necessary information in his original return on 31 May 2010, and that it is
excessively bureaucratic for his payment of the liability to have been extended
on the basis that the information was “not on the right form”. The Appellant adds
that while HMRC contend that he could have paid by the deadline what he
estimated to be the amount of tax liability, as someone new to the UK he had no
idea how much he would have to pay, and he thought that he could get the figure
worked out by declaring his income and replying to HMRC’s assessment. The
Appellant contends that in the circumstances, the imposition of the second
surcharge was not fair.
9. The HMRC statement of case argues amongst other matters
as follows. Section 8 and 8A TMA require that returns provide information
reasonably required for the purpose of establishing the amounts in which a
person is chargeable. In this case a return that satisfied the requirements of
ss.8 and 8A TMA was not filed until 3 August 2010. Extensive advice on how to
complete a tax return is shown on HMRC online guidance, which would have been
available to the Appellant. The late filing of a return cannot in itself be
deemed a reasonable excuse for late payment of of tax liability. The
requirement to include the self-assessment applies to all taxpayers except
those who submit the return in sufficient time for HMRC to calculate the tax
due. The Appellant’s tax return was filed outside the required time limits and
did not include a self-assessment, and in such circumstances, HMRC cannot
guarantee to notify a taxpayer of any tax due before the due date for payment.
Contrary to what the Appellant contends, postal delays were not the key reason
for the late payment. It was the responsibility of the Appellant to ensure
that his tax affairs were dealt with correctly and on time, and this duty was
not negated by the absence of a tax bill or reminder from HMRC. Ignorance of
the law is no excuse. Guidance is available from the HMRC website or telephone
helpline. The surcharge rate is prescribed by legislation, and the amount
charged was statutorily due.
10. In
a reply to the HMRC statement of case, the Appellant repeats his submission
that the imposition of the second surcharge was unfair, excessive and
disproportionate in the circumstances.
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 is
satisfied on the material before it that the Appellant’s tax liability was not
paid until August 2010, after the trigger date for the second default surcharge
of 31 July 2010. The Appellant is therefore liable to the second default
surcharge unless he has a reasonable excuse for the late payment. 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 understands 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 finds that the
Appellant has not established that there exist circumstances amounting to a
reasonable excuse by virtue of the fact that he was “someone
new to the UK”. Such an unparticularised statement, unsupported by
evidence, cannot be a reasonable excuse. In principle, the fact that a person
is new to the UK does not mean that they are relieved of their obligation to
meet their tax liabilities on time. As HMRC point out, guidance was available.
15. The Tribunal similarly finds
that the fact that the Appellant filed his tax return late, or failed to
provide the necessary information in the correct form, does not amount to a
reasonable excuse for late payment of the tax.
16. The Appellant also invokes
the fact that he was not resident in the UK when making the return, and that
there were delays in mail reaching him. However, no evidence or details are
given in support of this very general statement. The Appellant does not state
where he was at the relevant time. Nor does he explain why it took so long for
mail to reach him. From the papers, it appears that he was in Dublin at the time. In the absence of further details or evidence, the Tribunal is not
satisfied that there would be significant delays in mail from the UK being delivered in Dublin. However, even if it were the case that there were significant delays
in mail reaching him, the Tribunal is not satisfied that this would amount to a
reasonable excuse in the circumstances of his case. Had he complied with his
obligations within the applicable time limits, delays in the mail would have
been irrelevant. In any event, if there were significant delays in mail
reaching the Appellant from the UK, presumably he would have been aware of
this, and could have taken steps to deal with the problem.
17. Ultimately, the Tribunal
finds that the Appellant is seeking to rely on his own non-compliance with his
obligations as a reasonable excuse for not paying the tax before 31 July 2010.
The Tribunal is not satisfied that he has done
everything that could reasonably be expected in the circumstances, and
therefore finds that he does not have a reasonable excuse for the late payment.
Conclusion
18. For
the reasons above, the Tribunal dismisses the appeal and confirms the imposition of the surcharge.
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:18 August 2011
