Mr David Philip Eddies v Revenue & Customs [2011] UKFTT 780 (TC) (01 December 2011)
[2011] UKFTT 780 (TC)
TC01614
Appeal number: TC/2011/05077
Income
tax return—Penalty for late return (Taxes Management Act 1970 s.93(2))—Reasonable
excuse—Appeal dismissed
FIRST-TIER TRIBUNAL
TAX
MR
DAVID PHILIP EDDIES Appellant
-
and -
THE
COMMISSIONERS FOR HER MAJESTY’S
REVENUE
AND CUSTOMS Respondents
TRIBUNAL: Dr Christopher Staker (Tribunal Judge)
The Tribunal determined the
appeal on 17 November 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 July 2011, HMRC’s
Statement of Case dated 19 August 2011, and other papers in the case.
© CROWN COPYRIGHT
2011
DECISION
Introduction
1. The
Appellant appeals against a penalty of £100 imposed in respect of the late
filing of his income tax return for the tax year 2009/10.
The relevant legislation
2. Section 8
of the TMA provides in relevant part as follows:
(1) For the purpose of establishing the amounts in
which a person is chargeable to income tax and capital gains tax for a year of
assessment, and the amount payable by him by way of income tax for that year,
he may be required by a notice given to him by an officer of the Board—
(a) to make and deliver to the officer, a return
containing such information as may reasonably be required in pursuance of the
notice, and
(b) to deliver with the return such accounts, statements
and documents, relating to information contained in the return, as may
reasonably be so required.
…
(1D) A return under this section for a year of assessment
(Year 1) must be delivered—
(a) in the case of a non-electronic return, on or before
31st October in Year 2, and
(b) in the case of an electronic return, on or before
31st January in Year 2.
(1E) But subsection (1D) is subject to the following two
exceptions.
(1F) Exception 1 is that if a notice in respect of Year 1
is given after 31st July in Year 2 (but on or before 31st October), a return must
be delivered—
(a) during the period of 3 months beginning with the date
of the notice (for a non-electronic return), or
(b) on or before 31st January (for an electronic return).
(1G) Exception 2 is that if a notice in respect of Year 1
is given after 31st October in Year 2, a return (whether electronic or not)
must be delivered during the period of 3 months beginning with the date of the
notice.
…
3. Section 93
of the TMA states in relevant part as follows:
(1) This section applies where—
(a) any person (the
taxpayer) has been required by a notice served under or for the purposes of
section 8 or 8A of this Act (or either of those sections as extended by section
12 of this Act) to deliver any return, and
(b) he fails to comply with the notice.
(2) The taxpayer shall be liable to a penalty which
shall be £100.
…
(4) If—
(a) the failure by the
taxpayer to comply with the notice continues after the end of the period of six
months beginning with the filing date, and
(b) no application is made under subsection (3) above
before the end of that period,
the taxpayer shall be liable to a further penalty
which shall be £100.
…
(6) No penalty shall be imposed under subsection (3)
above in respect of a failure at any time after the failure has been remedied.
(7) If the taxpayer proves that the liability to tax
shown in the return would not have exceeded a particular amount, the penalty
under subsection (2) above, together with any penalty under subsection (4)
above, shall not exceed that amount.
(8) On an appeal against the determination under
section 100 of this Act of a penalty under subsection (2) or (4) above that is
notified to the tribunal, neither section 50(6) to (8) nor section 100B(2) of
this Act shall apply but the tribunal may—
(a) if it appears that,
throughout the period of default, the taxpayer had a reasonable excuse for not
delivering the return, set the determination aside; or
(b) if it does not so appear, confirm the determination.
(9) References in this section to a liability to tax
which would have been shown in the return are references to an amount which, if
a proper return had been delivered on the filing date, would have been payable
by the taxpayer under section 59B of this Act for the year of assessment.
(10) In this section—
“the filing date” in respect of a return for a
year of assessment (Year 1) means—
(a) 31st January of Year
2, or
(b) if the notice under section 8 or 8A was given after
31st October of Year 2, the last day of the period of three months beginning
with the day on which the notice is given;
“the period of default”, in relation to any
failure to deliver a return, means the period beginning with the filing date
and ending with the day before that on which the return was delivered.
4. Section
118(2) of the TMA provides as follows:
(2) 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 unless the excuse ceased and, after the excuse ceased, he shall
be deemed not to have failed to do it if he did it without unreasonable delay
after the excuse had ceased.
The arguments of the parties
5. The
Appellant’s case as stated in the notice of appeal and supporting documents includes
the following. Over the past two years he has made repeated requests and
supplied clear information with a view to paying tax on his pension through
PAYE. He was told over the course of 2010 that he had received various letters
and a self-assessment (SA) form, which was not true. He received the SA form
in February 2011. He has asked for advice and written many letters, but has
received no advice. He has received letters from five different tax offices,
none of which appear to be aware of his long-running problem. It took three
years for the Appellant to be able to pay his tax through PAYE, which began in
May 2011. He has been very confused, has always done his best to do the right
thing, and the matter has made him feel very ill.
6. The
HMRC statement of case states that a notice to file a self-assessment tax
return was issued to the Appellant on 6 April 2010. Undelivered correspondence
is recorded by HMRC, and it has no records to show any mail was returned
undelivered. The statement of case goes on to explain why tax had previously
not been collected through the Appellant’s PAYE, states that the Appellant had
an underpayment of tax for 2009/10, and that the Appellant was now deemed as
satisfying self-assessment criteria due to his reduced age allowance.
The Tribunal’s view
7. Difficulties that the Appellant says he had in arranging
for his tax to be collected through PAYE are not relevant to the issue in the
present appeal. Liability to tax, and the obligation to file a self-assessment
tax return are two separate matters. Nothing has been advanced to suggest that
HMRC was not lawfully entitled to issue to the Appellant a notice to file a
self-assessment tax return under s.8(1) of the TMA. If such a notice is
issued, regardless of whether or not the Appellant owes any tax, and regardless
of any difficulties that Appellant may have experienced in arranging payment of
tax, the Appellant is under an obligation to file a tax return by the
applicable deadline, and will incur the statutory penalty if he fails to do so.
8. In the papers is a printout from the HMRC database
indicating that a notice to file a 2009/10 self-assessment tax return was
issued to the Appellant on 6 April 2011, indicating that the deadline for
submitting the return was 31 January 2011, or if a paper return is submitted,
31 October 2010. On the evidence before it, the Tribunal is satisfied
that a notice to file was issued on 6 April 2010.
9. The Appellant’s case is that he did not receive a
self-assessment return before the filing deadline. A letter from the Appellant
to HMRC dated 25 February 2011, appealing against the penalty notice, states
that “The only correspondence I have received from you over the last twelve
months, I enclose copie of with this letter. I have received no self
assessment forms from you either this year or last year”. The HMRC decision on
that appeal dated 21 March 2011 failed to address this argument. Under the
heading “Why I do not think that you have a reasonable excuse”, the HMRC
decision stated that “You are still required by law to complete a tax return as
your age allowance had been reduced because of your total income”. In his
request for a review of the HMRC decision dated 18 April 2011, the Appellant
did not raise the contention that he had not received the notice to file a tax
return. The HMRC decision on review dated 9 June 2011 again does not address the
contention that the Appellant never received the notice to file.
10. HMRC
contends that undelivered correspondence is recorded by HMRC, and it has
no records to show any mail was returned undelivered. However, that of itself
does not mean that the notice was in fact actually delivered to the correct
address.
11. In
the circumstances, the Tribunal is required to decide this case on the basis of
the evidence before it, on a balance of probabilities. The Tribunal is
satisfied on the evidence that the notice to file was sent to the Appellant and
not returned to HMRC undelivered. The vast majority of letters sent though the
post are correctly delivered. The Tribunal appreciates that it is difficult
for the Appellant to provide any positive evidence to prove a negative, namely
that he did not receive the notice. However, the Tribunal takes into account
that the Appellant appears to have received other correspondence from HMRC,
that the Appellant offers no particular explanation of why he might not have
received this notice, and that he did not press the point about not having
received the notice in his request dated 18 April 2011 for review of the HMRC
decision. Given that the HMRC decision dated 21 March 2011 never addressed
this contention, it could be expected that this would have been a main ground
on which the Appellant would have requested a review of that decision, if the
Appellant was genuinely convinced that he had never received the notice to file.
From the papers, it would seem that the Appellant was more concerned with the
difficulties he had experienced in paying his tax by PAYE. One possible
explanation is that the Appellant, being preoccupied with seeking to arrange
payment of his tax by PAYE so that he would not have to file tax returns,
overlooked the fact that he had in fact received a notice to file a tax return for
2009/10. However, even if this were the explanation, the Tribunal is not
satisfied on the evidence before it that overlooking the need to file a tax
return in such circumstances would in this case amount to a reasonable excuse.
12. The
burden of proof is on the Appellant to establish that he has a reasonable
excuse for the late filing of the tax return, for purposes of s.93(8) or 118(2)
of the TMA. The Tribunal finds that the Appellant has not discharged that
burden.
Conclusion
13. Thus, under
s.100B(2)(a)(ii) of the TMA, the Tribunal confirms the penalty and dismisses
the appeal.
14. 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: 1 DECEMBER 2011
