Mr Michael John Collins v Revenue & Customs [2012] UKFTT 231 (TC) (02 April 2012)
[2012] UKFTT 231 (TC)
TC01925
Appeal
number: TC/2011/06734
INCOME TAX – Surcharge
on late payment of income tax (Taxes Management Act 1970 s.59C) – Appeal dismissed
FIRST-TIER TRIBUNAL
TAX
MR MICHAEL JOHN
COLLINS Appellant
-
and -
THE
COMMISSIONERS FOR HER MAJESTY’S
REVENUE
AND CUSTOMS Respondents
TRIBUNAL:
Dr Christopher Staker (Tribunal Judge)
The
Tribunal determined the appeal on 26 January 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 22 August 2011, and HMRC’s Statement of Case dated 4 October 2011,
and other papers in the case.
© CROWN COPYRIGHT 2012
DECISION
1. This is an appeal against a default surcharge imposed
pursuant to s.59C of the Taxes Management Act 1970 (the “TMA”) in respect of
the late payment of tax for the 2007/08 tax year.
2. The facts as set out in the HMRC statement of case are as
follows. The Appellant filed his 2007/08 tax return on 30 April 2008, and the
tax due according to the information provided in the return was paid on 21 May
2008. Subsequently, on 11 January 2011, HMRC made an assessment for 2007/08
under s.29 TMA, showing a tax liability of £7,138.40 for the year. Pursuant to
s.59B(6) TMA, payment of that amount was due 30 days after the assessment.
HMRC allowed an extra 6 days for delivery, such that the due date was 17
February 2011. In the meantime, on 18 January 2011, HMRC amended the s.29
assessment for 2007/2008, reducing it to £5,138.40. The Appellant paid this
amount in three instalments between 14 February 2011 and 6 April 2011. On or
about 8 April 2011, HMRC issued a surcharge liability notice pursuant to s.59C
TMA in the sum of £191.92. The appellant now appeals against that surcharge
liability notice.
3. The Appellant states by way of grounds of appeal that he
never received any payment date or mail from HMRC but only from his accountant,
that his tax liability was changed “three times in two months” by HMRC, and
that he never received a payment slip or a date to pay until he received the
late payment notice. The whole amount was paid within a week of him receiving
the late payment notice. The Appellant made two small payments on his credit
card only because of the credit card company. He never telephoned HMRC.
4. The HMRC response is as follows. The surcharge has been
imposed in accordance with the legislation. The Tribunal may only set it aside
if the Appellant establishes a reasonable excuse for the late payment that
existed throughout the period of default. The period of default in this case
is 10 February 2011 to 6 April 2011, 54 days. The Appellant has not
established that he was prevented from paying on time by anything unexpected or
outside his control. HMRC records show that the Appellant’s agent was given
authority by the Appellant to receive the Appellant’s statements of account.
HMRC nevertheless sent the Appellant a statement with attached payment slip on
28 February 2011. There is no record that this was returned undelivered. Had
the Appellant given the correct figures in his tax return, the correct amount
would have been assessed in 2008. Inability to pay is not a reasonable excuse,
and in any event, the Appellant did not seek to enter into a time to pay
arrangement with HMRC.
5. There is additionally information in the papers that the
Appellant rang HMRC on 15 February 2011 advising that he could not pay the
entire amount at that time, although it is noted that the Appellant denies this.
6. Section 29(1) of the TMA provides as follows:
(1) If an officer of the Board or the Board discover,
as regards any person (the taxpayer) and a year of assessment—
(a) that
any income which ought to have been assessed to income tax, or chargeable gains
which ought to have been assessed to capital gains tax, have not been assessed,
or
(b) that
an assessment to tax is or has become insufficient, or
(c) that
any relief which has been given is or has become excessive,
the
officer or, as the case may be, the Board may, subject to subsections (2) and
(3) below, make an assessment in the amount, or the further amount, which ought
in his or their opinion to be charged in order to make good to the Crown the
loss of tax.
7. Section 59B(6) of the TMA provides in relevant part as follows:
(6) Any amount of
income tax or capital gains tax which is payable by virtue of an assessment
made ... 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.
8. Section 59C of the TMA provides in relevant part as follows:
(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.
...
(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.
9. In an appeal against a default surcharge under s.59C, the
burden is on HMRC to establish on a balance of probabilities that the payment
was made late, such that the Appellant is liable to a surcharge under that
provision. The burden then shifts to the Appellant to establish on a balance
of probabilities that he had, throughout the period of default, a reasonable
excuse for the late payment.
10. The
Appellant did not give a clear statement of relevant facts in the notice of
appeal. The material facts of the case, as claimed by HMRC, are set out in the
HMRC statement of case. The Appellant had the opportunity to file a reply to
the HMRC statement of case, in which he could have contradicted the HMRC version
of the facts, but did not avail himself of that opportunity.
11. On
the basis of the evidence as a whole, the Tribunal is satisfied that the
payment of the tax liability was not made in full until 6 April 2011.
12. The
burden is thus on the Appellant to establish a reasonable excuse throughout the
period of default. HMRC contends that a statement
with attached payment slip was sent to the Appellant on 28 February 2011, and
that there is no evidence that it was returned undelivered. In any event, the
HMRC contention is that previously notices were sent to the Appellant’s agent,
with the Appellant’s authorisation. If the Appellant authorises notices to be
sent to an agent, it is in principle the responsibility of the Appellant to
ensure that his agent passes the relevant information to him. If the agent
fails to do so, that is in principle a matter between the Appellant and his
agent, and does not of itself amount to a reasonable excuse. In any event, the
Appellant’s notice of appeal states that “I did find out through my
accountant”. Most critically, the Appellant made small payments to HMRC on 14
February 2011 and 17 March 2011. This suggests that, whether or not he rang
HMRC, as claimed by HMRC and denied by him, he was aware of the tax liability
in February 2011.
13. On
its consideration of the evidence as a whole, the Tribunal is satisfied that
the Appellant knew of the s.29 assessment well before 6 April 2011, yet did not
pay in full until that date. The apparent reason for not paying in full
earlier was lack of funds. However, s.59C(10) of the TMA expressly provides
that inability to pay is not a reasonable excuse. The Appellant says that HMRC
changed the amount of the assessment “three times in two months”. In fact, a
s.29 assessment was made on 11 January 2011, and then changed only once, on 18
January 2011. That amendment reduced the tax liability, so did not prejudice
the Appellant.
14. The
Tribunal is not satisfied that the Appellant has established a reasonable
excuse throughout the period of default, and it follows that this appeal must
be dismissed.
Conclusion
15. Appeal
dismissed.
16. 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: 02 April 2012
