Alan Cornish t/a Kittiwake Partnership v Revenue & Customs (Rev 1) [2012] UKFTT 203 (TC) (19 March 2012)
[2012] UKFTT 203 (TC)
TC01898
Appeal number: TC/2011/07747
Income
tax – partnership return – whether Notice to File delivered, or deemed
delivered under the Interpretation Act s 7 – on the evidence, no – delivery
rebutted – appeal allowed and penalty set aside.
FIRST-TIER TRIBUNAL
TAX CHAMBER
ALAN
CORNISH
t/a
KITTIWAKE PARTNERSHIP Appellant
-
and -
THE
COMMISSIONERS FOR HER MAJESTY’S
REVENUE
& CUSTOMS Respondents
TRIBUNAL:
ANNE REDSTON (PRESIDING MEMBER)
The Tribunal determined the
appeal on 27 February 2012 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 21 September 2011,
HMRC’s Statement of Case submitted on 18 November 2011 and the Appellant’s
Reply dated 29 November 2011.
© CROWN COPYRIGHT
2012
DECISION
1. This
is an appeal against four £100 penalties charged on the partners in the
Kittiwake partnership (“the partnership”), for late submission of the 2009-10
partnership return.
2. The
Tribunal decided that the appeal was allowed and set aside the
penalties of £100 on each of the partners.
The
representative partner
3. The
partnership has four partners, Mr A Cornish, Mr SM Goodwin, Mr M Jordan and Mr
GR Bailey. Mr Cornish is the representative partner.
4. Only
the representative partner can appeal late filing penalties levied on other
partners in the partnership, and such an appeal is a “composite appeal” on behalf
of both the representative partner and the other three partners.
5. This
appeal is thus a composite appeal by Mr Cornish against the £100 levied on
himself and the £100 levied on the other three partners.
The
issue in the case
6. It
is not in dispute that the partnership return was filed after the due date for
filing 2009-10 paper returns, being 31 October 2010.
7. The
issue in the case is whether the Notice to File the partnership return was
delivered, or deemed to be delivered, to Mr Cornish.
The
facts and submissions
8. On
30 July 2009, HMRC set up a partnership record in response to a notification by
the nominated partner.
9. HMRC
say that they issued a Notice to File a partnership return on 6 April 2010 to
the same address as that being used for these Tribunal proceedings. Mr Cornish
says the Notice was not delivered. This is the key issue in dispute and I
discuss it below.
10. On 15 February
2011, HMRC issued a £100 penalty notice to each partner.
11. On 2 March 2011,
Mr Cornish sent a paper copy of the partnership return (SA800) to HMRC at Chapel Wharf, by special delivery, and a further copy to HMRC in Ipswich, also by special
delivery.
12. On 2 March 2011,
Mr Cornish spoke to Mary Stewart at Team 3 of HMRC’s East Kilbride contact
centre and confirmed that he had done all that was required.
13. On 7 March 2011,
Mr Cornish appealed the penalties.
14. On 9 March 2011,
Mr Cornish called HMRC’s Sunderland office and spoke to “Brett”, who told him
that HMRC do not sign for special delivery post. He was advised to call back in
seven days to see if the partnership return had been logged. Mr Cornish asked
Brett to make a note of the call.
15. On 16 March
2011, Mr Cornish called HMRC again and spoke to Paul in Liverpool and was told
that that it might take until the end of April before the position was clear.
16. By letter dated
23 March 2011, Mr Kennedy of HMRC’s Thornaby office wrote to Mr Cornish, saying
“we received your 2009-10 tax return on 4 March 2011 but as yet have not
processed it. I am trying to locate this return and get it processed for you.”
17. On 25 March
2011, Mr Cornish called HMRC and spoke to Emma in Newcastle. He was told that
the partnership return and covering letter had been received on 4 March 2011.
18. By letter dated
12 April 2011, HMRC wrote to Mr Cornish saying that the partnership return had
not been received. This letter was delivered to Mr Cornish’s home when he was
away on holiday
19. By letter dated
3 May 2011, Mr Cornish sent HMRC a further copy of the partnership return and
photocopies of the special delivery receipts. He said “if the copy SA800 sent
to Salford has not appeared in your work for processing, what has happened to
the SA800 sent as back-up to Ipswich please?”
20. HMRC registered
the return as delivered on 4 May 2011.
Mr
Cornish’s submissions
21. Mr Cornish said
that, because no partnership Notice to File was received, he did not realise it
had to be completed. Once aware of the obligation, he complied without delay.
He says “we always treat HMRC matters seriously and promptly”
22. He provided the
Tribunal with copies of all the special delivery receipts for his
correspondence with HMRC.
23. He says that the
partnership have been penalised “by HMRC acting in a manner akin to cowboy car
clampers.”
HMRC’s
submissions
24. HMRC submit that
the Notice to file was delivered to Mr Cornish as it was sent to the correct
address and not returned to them undelivered.
25. They further say
that the partnership return sent on 2 March 2011 was not delivered and “apologise
for this error”. The Tribunal reads this as an apology for telling Mr Cornish on
the telephone and by letter that the return had been received.
26. HMRC also say
that information about partnership filing obligations is on the HMRC website
and that ignorance of the law is not a reasonable excuse.
The
law on delivery
27. Both a Notice to
File and a partnership return can be sent by post (TMA s 115(2).
28.
The Interpretation Act 1978, s 7 states if a document is properly
addressed, had the correct postage and was then posted, it is deemed to be
delivered unless the recipient can rebut delivery. It reads:
“Where an Act
authorises or requires any document to be served by post (whether the
expression "serve" or the expression "give" or
"send" or any other expression is used) then, unless the contrary
intention appears, the service is deemed to be effected by properly addressing,
pre-paying and posting a letter containing the document and, unless the
contrary is proved, to have been effected at the time at which the letter would
be delivered in the ordinary course of post.”
29. The question as
to what is required before a person can rebut the deeming provision was
recently discussed in Calladine-Smith v SaveOrder Ltd [2011] EWHC 2501 (Ch), in reliance on the Court of Appeal authorities of Chiswell
v Griffon [1975] 2 All ER 665 and R v
County of London Quarter Sessions Appeal Committee, ex p Rossi [1965] 1 All
ER 670.
30. At [26] of Calladine-Smith
Morgan J said:
“if the addressee of
the letter proves on the balance of probability that the letter was not served
upon him then that matter has been proved and the section should be applied
accordingly. Of course it is not enough simply to assert that someone did not
receive the letter; the court will consider all the evidence and make its
findings by reference to the facts which are established including issues as to
the credibility of witnesses. That is the ordinary way in which a court goes
about making findings of fact.”
31. If the Notice to
File was not delivered, there is no obligation on the partnership to complete
it, and there can be no penalty: the legislation says:
“An officer of the Board may by a notice given to
the partners require such person as is identified in accordance with rules
given with the notice or a successor of his
(a) to make and deliver to the officer in
respect of such period as may be specified in the notice, on or before such day
as may be so specified, a return containing such information as may reasonably
be required in pursuance of the notice...”
Discussion
and decision
32. I deal first
with the sending of the partnership return.
33. Mr Cornish
provides extensive evidence, including the provision of post office receipts,
his own detailed telephone records, and the letter of 23 March 2011 from Mr
Kennedy of HMRC, to support his submission that he did send the partnership
return to HMRC on 2 March 2011.
34. I accept his
evidence and find as a fact that he did send the return on 2 March 2011, and
that it was in fact delivered to HMRC on 4 March 2011.
35. Mr Cornish says
that the Notice to File was not delivered. He says that, once he was aware that
the return was required, he filled in and sent a copy to HMRC.
36. I have already
found as a fact Mr Cornish did send the return on 2 March 2011, soon after he
received the Penalty Notice. He diligently and carefully followed up with HMRC
to see if they had received and logged the return. He is a compliant taxpayer
who takes his tax responsibilities seriously.
37. On the basis of
the detailed evidence submitted, I find Mr Cornish to be a highly credible
witness. In my judgment it is extremely unlikely that he received the Notice to
File and then ignored it. I therefore find that the Notice was therefore neither
delivered, nor deemed to be delivered.
38. In consequence,
Mr Cornish was not required to send a partnership return, and there can be no
penalty.
39. I therefore
accept the appeal and set aside the penalties.
40. 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.
ANNE REDSTON
TRIBUNAL PRESIDING MEMBER
RELEASE DATE: 19 March 2012
Amended pursuant to rule 37 of the Tribunal Procedure
(First-tier Tribunal) (Tax Chamber), Rules 2009 on 30 March 2012.
