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) >>
Culman v Revenue & Customs [2011] UKFTT 563 (TC) (22 August 2011)
URL: http://www.bailii.org/uk/cases/UKFTT/TC/2011/TC01408.html
Cite as:
[2011] UKFTT 563 (TC)
[
New search]
[
Printable PDF version]
[
Help]
Mr Peter Culman v Revenue & Customs [2011] UKFTT 563 (TC) (22 August 2011)
INCOME TAX/CORPORATION TAX
Penalty
[2011] UKFTT 563 (TC)
TC01408
Appeal number: TC/2011/02013
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
PETER CULMAN Appellant
-
and -
THE
COMMISSIONERS FOR HER MAJESTY’S
REVENUE
AND CUSTOMS Respondents
TRIBUNAL:
Dr Christopher Staker (TRIBUNAL JUDGE)
The Tribunal determined the
appeal on 13 July 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 9 March 2011, and HMRC’s
Statement of Case dated 19 April 2011, and other papers in the case.
© CROWN COPYRIGHT
2011
DECISION
Introduction
1. This is an appeal against first and second default
surcharges of £851.84 each 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 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
3. The HMRC statement of case states the following facts
which have not been disputed by the Appellant. The Appellant left his
employment with National Air Traffic Services Ltd on 31 July 2008. He received
a redundancy payment in the year ended 5 April 2009. The redundancy payment
was taxed at source at the basic rate. A review of HMRC records identified on
3 June 2010 that the Appellant had received untaxed income in 2008/09. A
personal tax return for 2008/09 was issued to the Appellant on 3 June 2010.
The return was filed on 19 August 2010. It was processed on 24 August 2010
showing £17,036.85 of tax outstanding for 2008/09. The tax should have been
paid on or before 31 January 2010. HMRC issued a surcharge notice on or shortly
after 17 September 2010, containing the first and second surcharges (TMA
s.59C(2) and (3) respectively) in the sum of £851.84 each.
4. In the Appellant’s notice of appeal, in the grounds for
appeal, the Appellant states that he is not appealing the fact that he owed the
tax. He states that “I knew I did and I had taken steps to ensure that I had
sufficient funds available to pay as and when HMRC advised me of what I owed”.
He says that once he received a tax return, he filled it in and returned it
promptly. When he then received the final tax bill, he paid it promptly.
5. The Appellant says that he was expecting to receive a tax
return from HMRC at the end of the 2008/09 tax year, that he did not worry when
he did not receive it as he had been told verbally that HMRC’s “catch up” can
take 2 years, that there was no information on the HMRC website as to what he
was required to do, and that he therefore decided to wait. The Appellant says
that it was his understanding of the way that the system works that HMRC would
realised that there was a significant difference between tax expected and tax
received and would send him a tax return. The Appellant says that HMRC failed
to do this, due to a transition to a new IT system and due to a reduction in
staff. The Appellant feels that HMRC is using technicalities of tax law to
recoup money from him because he is a soft target.
6. The HMRC statement of case argues amongst other matters
as follows. The Appellant’s failure to comply with his legal obligation to
file a tax return on time does not relieve him of his legal obligation to pay
the tax on time. Information about notification of chargeability, criteria for
inclusion in self-assessment, payment dates, trigger dates, surcharges, rates
of tax and PAYE is widely available, including through HMRC’s website,
telephone helpline and public counters. Self-assessment legislation places
responsibility for awareness of tax obligations upon the taxpayer, and not
being aware of tax obligations does not relieve the taxpayer of the duty to
comply with them. In other words, ignorance is not an excuse. This appeal is
not concerned with specialist or obscure areas of tax law, but with the
everyday responsibilities of a taxpayer, for which no specialist knowledge is
required. There was nothing exceptional that prevented the Appellant from
complying with the obligation.
7. By a letter dated 22 May 2011, the Appellant filed a
reply to the HMRC statement of case, raising a number of other arguments.
The Tribunal’s view
8. The
Appellant’s notice of appeal contains a request for permission to appeal
outside the time limit, stating that his wife died suddenly in February 2011.
The Tribunal is sympathetic to this unfortunate circumstance, and grants the
requested permission.
9. The
Tribunal must determine questions of fact on the evidence before it on the
basis of the balance of probability.
10. The Tribunal is
satisfied on the material before it that the Appellant is liable to the
surcharges 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.
11. 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]).
12. The Appellant’s grounds of
appeal state expressly that he knew that he owed the tax and that he had “taken steps to ensure that I had sufficient funds
available to pay as and when HMRC advised me of what I owed”. The
Appellant’s case is that he was operating under the “understanding” that he did
not have to do anything until he was contacted by HMRC, and that this might
take up to two years. The Tribunal finds that as a matter of law that is
incorrect, and that the obligation was on the Appellant to pay the tax by 21
January 2010. The Tribunal does not accept that HMRC were required to send him
a tax return in time for him to pay tax within the deadline only after the tax
return had been filed and processed. Nor does the Tribunal accept that the
Appellant was entitled to do nothing until he had been sent a tax return by
HMRC.
13. The issue then is whether it
could amount to a reasonable excuse that the Appellant acted in what he
suggests was good faith on the basis of what he understood to be the correct
position, even if that position was in fact incorrect.
14. The Appellant says that he
was aware that he had to pay the tax. His grounds of appeal state that there was no information on the HMRC website as to what
he was required to do, and that he therefore decided to wait. The Tribunal is
not satisfied that the Appellant did everything that could reasonably be
expected in the circumstances. Knowing that he had to pay the tax, and having
found nothing on the HMRC website, the Appellant could reasonably have been expected
to make further enquires as to what he had to do, either free of charge by
contacting the HMRC helpline, or for instance by consulting a tax adviser.
15. The Tribunal therefore finds that the Appellant does not have a
reasonable excuse for the late payment.
Conclusion
16. For
the reasons above, the Tribunal dismisses the appeal and confirms the imposition of the surcharges.
17. 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: 22 AUGUST 2011
