[2011] UKFTT 565 (TC)
TC01410
Appeal number: TC2011/00889
Application
for leave to appeal out of time – two year delay – application refused.
FIRST-TIER TRIBUNAL
TAX
KEVIN
WELCH Appellant
-
and -
THE
COMMISSIONERS FOR HER MAJESTY’S
REVENUE
AND CUSTOMS Respondents
TRIBUNAL:
LADY MITTING (TRIBUNAL JUDGE)
Sitting in Stoke on 20 May
2011
Mrs Clews appeared for the
Appellant
Mr P Jones of the Solicitor’s
office of HM Revenue and Customs for the Respondents.
© CROWN COPYRIGHT
2011
DECISION
1. On
22 September 2008, HMRC issued an assessment against Mr Welch in the sum of
£5,522.08. Any appeal against the assessment should have been lodged within 30
days, i.e. by 22 October 2008. An appeal was received on the 19 October 2010
but was rejected by HMRC, as being out of time and they refused to accept a
late appeal. I heard the application for admission of a late appeal on 20 May
2011. I rejected the application, giving my reasons orally with the consent of
the parties. The Appellant has now requested full written reasons which I
hereby give.
Legislation
2. Section
49 Tax’s Management Act 1970 provides as follows:
“(1) This section applies in a
case where –
(a) notice of appeal may
be given to HMRC, but
(b) no notice is given before
the relevant time limit
(2) Notice may be given after the
relevant time limit if –
(a)
HMRC agree, or
(b)
Where HMRC do not agree, the tribunal gives permission
(3) If the following conditions
are met HMRC shall agree to notice being given after the relevant time limit.
(4) Condition A is that the
Apellant has made a request in writing to HMRC to agree to the notice being
given.
(5) Condition B is that HMRC are
satisfied that there was a reasonable excuse for not giving notice before the
relevant time limit.
(6) Condition C is that HMRC are
satisfied that request under subsection (4) was made without unreasonable delay
after the reasonable excuse ceased.
(7) If a request of the kind
referred to in subsection (4) is made, HMRC must notify the Appellant whether
or not HMRC agree to the Appellant giving notice of appeal after the relevant
time limit.
(8) In this subsection “relevant
time limit”, in relation to notice of appeal, means the time limit before which
the notice is to be given (but for this section).”
3. Section
118 (2) Tax’s Management Act 1970 provides:
“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 if he did it without unreasonable delay
after the excuse had ceased.”
Chronological Background
4. On
11 July 2007, HMRC wrote to Mr Welch advising him that they intended to look
again at his returns for the years ended 5 April 2001; 2002 and 2003 under the
discovery provisions of Section 29 T.M.A. HMRC also copied Mr Welch into a
letter of the same date written to his accountants, David Thomas, Business
Services in which a number of questions were asked. In the absence of any
response from the agents, HMRC wrote reminders dated 7 September 2007, 22 October
2007, 16 January 2008, 25 February 2008. HMRC also wrote direct to Mr Welch on
the 28 March 2008 asking for a response. In response to the letter of 28
March, Mr Welch rang HMRC on 7 April to say that his agent was no longer acting
for him and that he thought that everything had been sorted out. He was
advised that that was not so.
5. On
10 April 2008, HMRC were notified that a new agent had been appointed and
received a call on the 15 April 2008 from a Mr Jones of Tixall Accountancy. Mr
Jones advised that he was now acting and would respond to HMRC. Three months
elapsed with nothing further being heard and HMRC wrote again to Mr Welch on
the 8 July asking for an agent authority. Still nothing was heard from either
the agent or from Mr Welch and on the 18 August 2008, HMRC tried to telephone
the two numbers it had for Mr Welch but both lines were dead. HMRC therefore
wrote to Mr Welch on the 19 August advising that they had heard nothing and
concluding “will you please telephone me within the next 14 days to avoid
formal assessments/proceedings.” Nothing was heard and the assessment was
raised on the 22 September 2008.
6. Mr
Welch telephoned on the 26 September 2008 to say that he thought that his agent
had provided everything and that the case had been settled. It was made clear
to him that this was not the case. On 30 September, Mr Welch telephoned to say
that he would ask his agent to call and a phone call was received that day from
Mr Jones who advised he was trying to obtain information from the previous
agent. Still nothing further was heard and by letter dated 16 January 2009,
copies of all earlier correspondence and the assessment were sent out to the
agent. He was also expressly informed in this letter that no appeal had been
lodged. Thereafter, despite telephone calls and reminders to agent and Mr
Welch nothing further was heard and the job of the assessing officer was in
effect over and the debt was in the hands of the Debt Management Unit.
7. Nothing
further was heard until September 2010 when Messrs Clews & Co. became
involved and the appeal was lodged.
8. It
is therefore against this chronological background that the application for
permission to appeal out of time falls to be considered.
9. I
comment first, but briefly, on the merits of the appeal. No detailed evidence
was given as the hearing was not concerned with the substantive issue. The
assessment was made up on two elements – a suspected under declaration of
Director’s remuneration and an estimated capital gain on Mr Welch’s disposal of
his share-holding in K-Nex Ltd. HMRC based their figures on the very limited
information which they did have as no employment page for 2002/03 had ever been
completed or submitted and no capital gains tax computation was ever submitted
for the sale of the shareholding. Information and clarification on both issues
had been sought but none provided. Mr Welch no longer had any paperwork or
records to support his appeal but maintained that he had made very little
income and did not think that his shareholding would have triggered any capital
gain. In fact, at one stage in correspondence, Mrs Clews suggested, “given
that there is no evidence from either party to support the undeclared income,
we feel it should be reduced to nil.”
10. If leave to
appeal out of time were given, the onus of proof in the substantive hearing
would be on Mr Welch. If ever he had the documentation, he has it no longer
and he therefore has virtually no prospect of success, given that he has no
evidence to support his claim. In a further letter dated 15 September 2010 Mrs
Clews suggested, “In light of how old this case is, would it be possible to
render the case closed in the absence of Mr Welch being able to provide any
evidence to defend his position?”
11. Again, it is
bearing this factor also in mind that I consider the application.
Mr Welch’s contentions
12. Mr Welch
maintained that he had been naïve in his dealings with his tax affairs. He had
believed that his agents were dealing with matters on his behalf but he
accepted that he should have been more pro-active in chasing them up. He felt
that the subjects of the assessment – especially the capital gains tax issue –
were too complex and technical for him as a layman to understand and deal with
himself. He therefore had, in his own mind, no alternative but to rely on his
accountants. He had on occasion telephoned HMRC but had believed or got the
impression that they did not wish to speak to him but would only deal with his
agent. He had been assured by Mr Jones that he was dealing with everything
properly and indeed whenever Mr Welch received anything from HMRC he took it
round to Mr Jones. As far as merit was concerned, relying on an on-line
company credit report, Mr Welch estimated his assessable income at £2,210 (he
was only a director for 43 days of the assessable tax year) and he put in a
draft capital gains computation showing a chargeable gain of nil.
Conclusions
13. Mr Welch clearly
received the assessment. He accepts that he did and indeed he telephoned HMRC
within days of having received it. The letter of assessment quite clearly
advised Mr Welch of the need for him to give written notice of appeal within 30
days if he did not agree to the figures. For the next couple of years, Mr
Welch received regular statements from the Debt Management Unit so, clearly,
must have been aware that his accountants had not resolved matters.
14. I do not know
how far, if at all, the figures put in on the day would go towards resolving
the substantive issue if leave to appeal were given but whatever was put in on
the day could and should have been put in considerably earlier. There has to
be a measure of finality in one’s dealings with one’s tax affairs. The public
interest requires it.
15. It is no
support to Mr Welch’s claim that he relied upon his representatives. A tax
payer cannot abdicate his responsibility by relying on his accountants. The
ultimate responsibility always lies with the taxpayer and it is incumbent upon
every taxpayer to keep tabs on his accountant and make sure that whatever needs
to be done is being done. As I said previously, Mr Welch could not reasonably
have thought that this was the case because of the many demands for payment
which he received from the DMU. Mr Welch did not act as a reasonable diligent
taxpayer should have done. There has been no good explanation as to why the
appeal was not lodged within time and the appeal was not put in, “without
unreasonable delay after the reasonable excuse ceased”. Once Mr Welch realised
that his representative was not acting properly on his behalf, he should
thereafter have acted speedily to rectify his accountant’s failure but
unfortunately he did not.
16. For all these
reasons I find that HMRC acted perfectly reasonably in refusing the application
for a late appeal to be accepted and I also refuse it.
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.
TRIBUNAL JUDGE:
RELEASE DATE: 22 AUGUST 2011
