First-tier Tribunal (Tax)

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URL: http://www.bailii.org/uk/cases/UKFTT/TC/2012/TC02270.html
Cite as: [2012] UKFTT 593 (TC)

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Ramona Theurer v Revenue & Customs [2012] UKFTT 593 (TC) (17 September 2012)
INCOME TAX/CORPORATION TAX
Penalty

[2012] UKFTT 593 (TC)

TC02270

Appeal number: TC/2012/02619

Appeal against penalty for late return – reasonable excuse – appeal allowed

FIRST-TIER TRIBUNAL

TAX CHAMBER

	RAMONA THEURER	Appellant

	- and -

	THE COMMISSIONERS FOR HER MAJESTY’S	Respondents
	REVENUE & CUSTOMS

TRIBUNAL:	JUDGE JENNIFER BLEWITT

The Tribunal determined the appeal on 9 August 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 12 January 2012, letter from the Appellant to HMRC and the Tribunal dated 22 July 2011, 31 August 2011 and 12 January 2012 and HMRC’s Statement of Case submitted on 7 March 2012.

DECISION

1. This is an appeal against a penalty in the sum of £100 imposed by HMRC under Sections 93 (2) and (4) Taxes Management Act 1970 for the late filing of the Appellant’s personal tax return for the tax year ended 5 April 2010.

2. HMRC did not object to the late appeal.

Facts

3. On 11 November 2010 a notice to file a tax return for the year ended 5 April 2010 (“the relevant year”) was issued to the Appellant. The notice was returned as undelivered due to the fact it was not sent via airmail.

4. HMRC reissued the notice on 25 January 2011 via airmail, advising that the Appellant’s 2009/2010 return remained outstanding.

5. The revised filing date for submission of the return was 2 May 2011. The return was received by HMRC on 17 October 2011.

Appeal

6. The Appellant appealed to HMRC on 12 April 2011, indicating that German Tax returns had already been submitted and tax paid. The Appellant advised that her accountant was checking the UK position but as the return was not received on timem she had not been able to file it.

7. A return was sent to the Appellant on 2 June 2011, along with advice as to how to file online.

8. On 22 July 2011 the Appellant advised HMRC by letter hat four months of the relevant UK tax year still required checks to be made and the return would be filed as soon as possible. The Appellant also stated that HMRC were already aware of her self-employed income as a dentist between January and April 2010; she had received no other earnings. The return received on 2 June 2011 would be returned as soon as possible. It had been beyond the Appellant’s control to file the return as it had not been received until HMRC’s letter of 2 June 2011 and thereafter required checks to be made.

9. HMRC upheld the decision to impose a penalty by letter to the Appellant dated 8 August 2011. HMRC took the view that having promised to file the return as soon as possible, the reasonable excuse had ended as the return remained outstanding.

10. The Appellant provided the following information to HMRC by letter dated 31 August 2011:

· HMRC had advised that a return would be received when the Appellant returned to Germany;

· The Appellant did not receive a return, but instead a penalty;

· The German tax year differs to that in the UK; due to the complexity the Appellant let her German tax advisor complete the UK return;

· The tax advisor had told the Appellant that she would have to pay tax once but that four months of the relevant year still required checks by the German authorities to ascertain whether tax was due in Germany or the UK;

· On 22 July the Appellant was advised by her tax advisor that a tax return was required to be filed in the UK;

· As the German tax advisor did not have sufficient knowledge of the UK tax system, the Appellant had to instruct a special UK tax advisor, who required time to complete the return;

· It was beyond the Appellant’s control that the German tax authorities took so long to complete its investigation.

11. Following a review, HMRC confirmed that the penalty was upheld, although if the return was filed and the liability had been paid on time, the penalty may be reduced to nil.

12. The Appellant’s grounds of appeal contained in her Notice of Appeal to the Tribunal can be summarised as follows:

· The return was not received by the Appellant until the end of June 2011, at which point HMRC stated that the penalty would be delayed until HMRC reached a decision;

· The German authorities took until 22 July 2011 to check the Appellant’s return. HMRC were advised of the delay and the Appellant’s new address, however no reply was received but a letter was sent to the old address advising that the reasonable excuse no longer existed;

· Usually 9 months is allowed to submit a return, however the Appellant only had from June 2011 when the return was received;

· The Appellant could not find a tax advisor in Germany who understood the UK tax system and she had to seek and instruct an advisor in the UK.

Submissions of HMRC

13. The default period from 2 May 2011 to 17 October 2011 was 168 days. HMRC accepted that the penalty had been suspended pending the outcome of the appeal.

14. A notice to file was sent via airmail on 25 January 2011 which advised that the due date was 3 months after the date of the notice and that a penalty would be imposed if the return was not submitted by the deadline.

15. The legislation under Section 8 Taxes Management Act 1970 requires that a return be delivered by the filing date.

16. The front of the return issued on 2 June 2011 advised that penalties would be imposed for late returns.

17. HMRC accepted that the Appellant had encountered delay with the German authorities until July 2011 however the return was not received until 17 October 2011.

18. HMRC accepted that its letter dated 8 August 2011 was sent to the wrong address however the Appellant’s letter was not received until 28 July 2011 and not processed until 18 August 2011.

19. The Appellant could have submitted a provisional return and the actions of her agent did not provide the Appellant with a reasonable excuse.

Decision

20. The issue for the Tribunal to consider is whether a reasonable excuse for the late submission of the Appellant’s return existed throughout the period of default.