[2012] UKFTT 301 (TC)
TC01987
Appeal
number:TC/2011/8147
Income tax- penalty for
late payment of tax s59C TMA- HMRC not providing return, payslip or statement
to taxpayer- reasonable excuse
FIRST-TIER TRIBUNAL
TAX CHAMBER
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DR CHARLES
GORDON
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Appellant
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- and -
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THE
COMMISSIONERS FOR HER MAJESTY’S
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Respondents
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REVENUE &
CUSTOMS
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TRIBUNAL:
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JUDGE CHARLES HELLIER
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SUSAN HEWETT
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Sitting in public in Southampton on 25 January 2012
David Edmonds FCA, CTA for the
Appellant
Mr Bates for HM Revenue and
Customs, for the Respondents
© CROWN COPYRIGHT
2012
DECISION
1.
Dr. Gordon appeals against a surcharge of £488.55 imposed under section
59C(2) TMA 1970 for failure to pay tax in respect of the year 2009/10 on time.
2.
We heard evidence from Mr. Edmonds and from Dr. Gordon. We find the
following facts.
3.
Dr. Gordon received no tax return from HMRC for either 2008/2009 or for
2009/2010.
4.
However, realising he had income which needed to be returned, Dr Gordon
contacted Mr. Edmonds. Mr. Edmonds prepared and submitted tax returns for Dr.
Gordon in respect of each of the years. They were submitted before 31 January
in each year. That for 2009/2010 was submitted electronically on 21 December
2010.
5.
In January 2010 (following the first year in which he had had additional
income and in which Mr Edmonds had acted for him) Dr. Gordon, realising that
tax was due (as he had been advised by Mr. Edmonds following the submission of
return) rang HMRC and asked how he should pay it. He was advised he could pay
by debit card. He did so there and then.
6.
After he had prepared and submitted the return for 2009/2010, Mr.
Edmonds wrote to Dr. Gordon. In his letter he said:
"Payments on account
(2010/11)
"However, in addition to
the above liability to settle 2009/10, the Inland Revenue will also want a
payment on account for the current year (2010/11) amounting to 50% of previous,
being a further £4885.50, making a total payment due in January 2011 of
£14,656.50.
"Tax liability
"This will be due on 31
January 2011. The Inland Revenue will send you a demand in January."
7.
Dr. Gordon had the funds to pay the tax due at the relevant time.
8.
Following the submission of his returns in each year HMRC sent no demand
for payment, no statement of account and no payment slip. Normally they would
do so.
9.
After January 2010 Dr. Gordon tried to contact Mr. Edmonds about paying
the tax. Eventually he contacted him in May 2010 (Mr. Edmonds been away). Dr.
Gordon then telephoned HMRC and made payment of the outstanding tax and
interest.
The Law
10.
Section 59C TMA 1970 provides:
“(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% of the underpaid tax.
...
“(9) On any appeal ... the
tribunal may --
(a)
if it appears that, throughout a 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.
…
“(12) In this section --
“the due date", in
relation to any tax means the date on which the tax becomes due and payable
..."
11.
The due date for the payment of the tax is defined by section 59B TMA.
Subsection 59B(1) provides that the difference between the liability contained
in a person’s self-assessment calculation and the amounts of tax already paid by
him shall be payable by him as mentioned in subsections (3) or (4). Those
subsections provide:
"(3) In any case where
the person --
(a)
gave the notice required by section 7 of this Act [see below] within six
months from the end of the year of assessment, but
(b)
was not given notice under section 8 or 8A of this Act until after the
31st October next following that year,
the difference shall be
payable at the end of the period of three months beginning with the day on
which the notice under section 8 or 8A was given.
“(4) In any other case that
difference shall be payable on or before 31 January next following the year of
assessment."
12.
Section 7 TMA provides as follows:
“(1) Every person who –
(a) is chargeable to income
tax or capital gains tax for any year of assessment, and
(b) has not received a notice
under section 8 of this Act requiring a return for that year of his total
income and chargeable gains,
shall, subject to subsection
(3) below [which is not relevant in this case], within six months from the end of
that year, give notice to an officer of the Board that he is chargeable."
13.
Section 8 provides that a person may be required by notice given to him
by an officer to make and deliver a tax return before a specified day. The
specified day is in a case of an online return 31 January next following the
year of assessment or, where notice under the section 8 is given after 31
October next following the year, the last day of the period of three months
beginning with the day on which the notice was given.
Discussion
14.
A penalty may be assessed
under section 59C only if the tax is paid more than 28 days after the due date.
That raises the question of what is the "due date" in this case.
15.
Normally, where a person has received a tax return the due date is
determined by section 8, and normally for online returns it is 31 January after
the end of the year.
16.
But Dr. Gordon did not receive a tax return. The position is thus
governed by section 59B(3) and (4). Subsection (3) applies where the taxpayer
gives the notice that he is chargeable required by section 7 within six months
from the end of assessment. There was no evidence before us that any such
notice been given before 31 October 2010, which was six months after the end of
the year 2010/11. In our view the completion of the online return constituted
such notice, but, because that was done on 21 December it was unfortunately not
done within the period of six months relevant to condition (a) of subsection
(3). Thus the requirement in (a) of subsection (3) is not satisfied. As a
result the due date is not determined by subsection (3).
17.
Thus subsection (4) determines the due date. That provides that the
amount is payable by 31 January next following the year of assessment. In this
case that was 31 January 2011.
18.
Thus the tax was paid more than 28 days after the due date because it
was paid in May 2011. Therefore the condition set out in section 59C(2) is
satisfied. Accordingly, unless Dr. Gordon can rely upon subsection (9) - that
is to say unless he has a reasonable excuse for not paying the tax on time- the
appeal must be dismissed.
19.
Unhappily it seems to us that Dr. Gordon did not have a reasonable
excuse. We say "unhappily" because Dr. Gordon took considerable and
commendable care to ensure that he made a return on time. He was not helped in
this endeavour by HMRC's failure to provide him with a return or the usual
payslips and statements. One might consider it unreasonable to assess a
surcharge in these circumstances. But Dr. Gordon knew of his obligation to pay
the tax, knew the date by which it should be paid, and knew he could pay it by
telephone with a credit or debit card. He may well have placed some reliance
upon Mr. Edmonds’ assurance that he would be sent a pay slip, but overall it
seems reasonable to expect him to have done something about payment before the
31 January deadline arrived. We do not think in these circumstances that he is
absolved from that expectation by Mr. Edmonds’ advice. thus in relation to the
narrow issue of whether he had a reasonable excuse for the delay we find he did
not.
20.
Mr Edmonds says that the public’s cooperation with the tax system relies
upon its being, and being administered, fairly. He recalls HMRC’s failure to
send out payslips in July 2011 and HMRC’s resulting agreement to waive interest
and penalties where payment was received before September of that year. He
argues that Dr Gordon was not treated fairly by HMRC and that as a result he
had a reasonable excuse throughout the period of non payment.
21.
But we are a creature of statute. In approaching section 59C our task is
not to ensure fairness of the tax system but to consider whether the Appellant
had a reasonable excuse. HMRC’s actions may have a bearing on whether the that
is the case but only if they impinge sufficiently on the taxpayer’s action. The
circumstances of the taxpayer are relevant: what it may be unreasonable to
expect from a person who is 80 and has always used a payslip may be different
from what it may be reasonable to expect from a person familiar with modern
technology. Dr Gordon is a modern man and knew that he did not need a payslip.
It was reasonable in our view to expect him to arrange to pay as he had in the
previous year.
22.
As a result we conclude that the surcharge is due and dismiss the
appeal.
23.
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.
CHARLES HELLIER
TRIBUNAL JUDGE
RELEASE DATE: 01 May 2012
