Julie Burton and Louise Burton-Taylor v Revenue & Customs [2012] UKFTT 473 (TC) (24 July 2012)
[2012] UKFTT 473 (TC)
TC02150
Appeal number: TC/2011/08115
TC/2011/08121
INFORMATION NOTICE – Penalty
for failure to comply (FA 2008 Sch 36) – Reasonable excuse –Appeal dismissed
FIRST-TIER TRIBUNAL
TAX CHAMBER
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JULIE BURTON AND LOUISE BURTON-TAYLOR
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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 CHRISTOPHER STAKER
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SONIA GABLE
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Sitting
in public in London on 11 June 2012
No
appearance for the Appellant
Mr
Brian Morgan for the Respondents
© CROWN COPYRIGHT 2012
DECISION
Introduction
1. This is an appeal against
the imposition of daily penalties pursuant to Schedule 36 of the Finance Act
2008 (“Schedule 36”) for failure to comply with information notices.
2. The penalty notices were issued to each of the Appellants
on 24 September 2010. The amount of the penalties are £980 in the case of
Julie Burton and £850 in the case of Louise Burton-Taylor.
The relevant legislation
3. Paragraph 1 of Schedule 36 provides that:
(1) An officer of Revenue and Customs may by notice in
writing require a person (“the taxpayer”)–
(a) to provide information, or
(b) to produce a document,
if the information or document is reasonably
required by the officer for the purpose of checking the taxpayer's tax
position.
(2) In this Schedule, “taxpayer notice” means a notice
under this paragraph.
4. Paragraph 6 of Schedule 36 relevantly provides that:
(1) In this
Schedule, “information notice” means a notice under paragraph 1 ...
5. Paragraph 7 of Schedule 36 relevantly provides that:
(1) Where a person is required by an information notice
to provide information or produce a document, the person must do so–
(a) within such period, and
(b) at such time, by such means and in such form (if
any), as is reasonably specified or described in the notice.
...
6. Paragraph 29 of Schedule 36 relevantly provides that:
(1) Where a taxpayer is given a taxpayer notice, the
taxpayer may appeal against the notice or any requirement in the notice.
(2) Sub-paragraph (1) does not apply to a requirement
in a taxpayer notice to provide any information, or produce any document, that
forms part of the taxpayer's statutory records.
...
7. Paragraph 39 of Schedule 36 relevantly provides that:
(1) This paragraph applies to a person who–
(a) fails to comply with an information notice, or
(b) deliberately obstructs an officer of Revenue and
Customs in the course of an inspection under Part 2 of this Schedule that has
been approved by the tribunal.
(2) The person is liable to a penalty of £300.
...
8. Paragraph 40 of Schedule 36 relevantly provides that:
(1) This paragraph applies if the failure or
obstruction mentioned in paragraph 39(1) continues after the date on which a
penalty is imposed under that paragraph in respect of the failure or
obstruction.
(2) The person is liable to a further penalty or
penalties not exceeding £60 for each subsequent day on which the failure or
obstruction continues.
9. Paragraph 45 of Schedule 36 relevantly provides that:
(1) Liability to a penalty under paragraph 39 or 40
does not arise if the person satisfies HMRC or (on an appeal notified to the
tribunal) the tribunal that there is a reasonable excuse for the failure or the
obstruction of an officer of Revenue and Customs.
(2) For the purposes of this paragraph–
(a) an insufficiency of funds is not a reasonable
excuse unless attributable to events outside the person's control,
(b) where the person relies on any other person to do
anything, that is not a reasonable excuse unless the first person took
reasonable care to avoid the failure or obstruction, and
(c) where the person had a reasonable excuse for the
failure or obstruction but the excuse has ceased, the person is to be treated
as having continued to have the excuse if the failure is remedied, or the
obstruction stops, without unreasonable delay after the excuse ceased.
10. Paragraph
47 of Schedule 36 relevantly provides that:
A
person may appeal against any of the following decisions of an officer of
Revenue and Customs–
(a) a decision that a penalty is payable by that person
under paragraph 39 ..., or
(b) a decision as to the amount of such a penalty.
11. Paragraph
48 of Schedule 36 relevantly provides that:
...
(3) On an appeal under paragraph 47(a) that is notified
to the tribunal, the tribunal may confirm or cancel the decision.
(4) On an appeal under paragraph 47(b) that is
notified to the tribunal, the tribunal may–
(a) confirm the decision, or
(b) substitute for the decision another decision that
the officer of Revenue and Customs had power to make.
Outline of the facts
12. On
2 June 2010, information notices under paragraph 1 of Schedule 36 were issued
to both Appellants. No appeals were lodged
against those information notices.
13. Initial
penalty notices under paragraph 39 of Schedule 36 were issued to Julie Burton
on 16 September 2010 and to Louise Burton-Taylor on 29 September 2010.
14. According
to the HMRC statement of case, on 15 October 2010, both Appellants lodged
appeals against the initial penalties, but these were later withdrawn. The
Appellants have not sought to contradict this.
15. On
24 December 2010, penalty notices were then issued for daily penalties under
paragraph 40 of Schedule 36. In the case of Julie Burton, the amount of the
penalty notice was £980, calculated as £10 per day from 17 September 2010 to 23
December 2010 (98 days). In the case of Louise Burton-Taylor, the amount of the
penalty notice was £850, calculated as £10 per day from 30 September 2010 to 23
December 2010 (85 days).
16. According
to the HMRC statement of case, an alternate dispute resolution pilot was
entered into between both parties between February and July 2011, which
resulted in the initial penalty being accepted but not the daily penalties.
The Appellants have not sought to contradict this.
17. On
14 September 2011 and 19 September 2011 in respect of each of the Appellants,
HMRC issued review decisions, upholding the decisions to impose daily
penalties.
18. The
Appellants now appeal against the decisions to impose daily penalties.
The hearing
19. The
appeal was listed for hearing at Bedford Square in London on 11 June 2012. At
the hearing there was no appearance by or on behalf of either Appellant. Mr
Morgan appeared for HMRC. He stated that he had spoken to the Appellant’s
agent approximately 3 weeks previously, and that the agent had said that the
hearing should proceed in the Appellants’ absence. In the papers was a letter
from HM Courts and Tribunals Service to the Appellant’s agent at the address
given in the notices of appeal, giving notice of the hearing. In the
circumstances, the Tribunal was satisfied that the party has been notified of the
hearing or that reasonable steps have been taken to notify the party of the
hearing, and considered that it was
in the interests of justice to proceed with the hearing in the Appellants’
absence.
The Appellants’ submissions
20. The
notice of appeal of Julie Burton states as follows. From the beginning the
Appellant had stated the belief that the information requested was not relevant
to the HMRC investigation as the Appellant had a PAYE job, and that the
requests were unreasonable. The Appellant stated throughout that she would not
be supplying this material, and the penalty is unjust. After various meetings,
the Appellant agreed to provide the information. The Appellant is being
penalised for not providing details of bank accounts held jointly with her
mother. She has stated that she has no interest in these accounts and that her
mother is returnable for all moneys in these accounts and any interest earned
on them. The Appellant had some trouble getting information from the company
managing the rental of her home, which was something over which she had no
control and for which she should not be penalised.
21. The
notice of appeal of Louise Burton-Taylor states as follows. The Appellant had
gone through a messy divorce and it was only when she ordered items from the
bank that she found out that her husband was having any post with his name on
it redirected to his address. When she found out about this she had to reorder
the items from her bank, and she told the bank that she would collect them in
person. HMRC were asking for documents which the Appellant considered from the
beginning to be irrelevant.
HMRC’s submissions
22. HMRC
submits as follows. The only issue is whether there was a reasonable excuse
for the delay in providing the information. No appeal was issued against the
information notices themselves, and therefore the Appellants cannot argue that
the information is not relevant. Julie Burton was joint signatory to some of
the requested accounts, and no explanation has been provided why she could not
obtain and submit the account statements within the required timeframe. In a
meeting between the agent and HMRC on 6 January 2011, the agent said that it
was not his policy to release private records. Many of the requested documents
were clearly withheld because of this policy of the agent. Louise
Burton-Taylor’s argument that her husband redirected her mail relates to only
one bank account whereas there were several bank and credit card statements
outstanding. The information notices have not been complied with, and no
reasonable excuse for the failure to comply has been provided. The daily
penalties could have been as much as £60 per day, but HMRC has imposed
penalties of only £10 per day. Most of the information was finally supplied by
July 2011.
The Tribunal’s findings
23. The
Appellants’ grounds of appeal do not dispute that the information notices were
not complied with in full during the period to which the daily penalty notices
relate.
24. The
Tribunal accepts the HMRC submission that the Appellants cannot challenge the
daily penalty notices on the basis that the requested information was
irrelevant or that the requests were unreasonable. The Appellants did not
appeal against the information notices themselves, and indeed, it appears that
the Appellants have accepted the initial penalties of £300 for failing to
comply.
25. Furthermore,
a belief that the information requested is irrelevant, or a policy of a
taxpayer’s accountant not to release certain information to HMRC, is not a
reasonable excuse for failure to comply with an information notice.
26. The
burden of proof is on the Appellant to establish the existence of a reasonable
excuse for failure to comply on a balance of probabilities. Furthermore,
paragraph 45 of Schedule 36 will not permit a reasonable excuse defence during
periods when the reasonable excuse no longer existed. Paragraph 45(2)(c) of
Schedule 36 provides that “where the person
had a reasonable excuse for the failure or obstruction but the excuse has
ceased, the person is to be treated as having continued to have the excuse if
the failure is remedied, or the obstruction stops, without unreasonable delay
after the excuse ceased”. Thus, to avoid
liability for the whole of the daily penalties, the Appellants would need to
establish that the reasonable excuse continued throughout the whole of the
period to which the daily penalties relate.
27. The
Tribunal does not consider the statements in the grounds of appeal section of
the notices of appeal to be evidence capable of establishing the existence of a
reasonable excuse on a balance of probabilities. On its consideration of the
evidence as a whole, the Tribunal does not find sufficient evidence to
establish a reasonable excuse for either of the Appellants.
28. It
follows that the appeals must be dismissed.
Conclusion
29. The
appeals are dismissed.
30. 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.
CHRISTOPHER STAKER
TRIBUNAL JUDGE
RELEASE DATE: 24
July 2012
