The facts

"We have sent you this paper form to fill in, but you can also file a tax return online using our Internet service (using third-party commercial software).

Make sure the tax return, and any documents we ask for, reach us by:

·        31 October 2010 if you want us to calculate the trust or estate's tax or if you file a paper tax return, or both, or

·        31 January 2011 if you file a return online."

"Please note the penalty legislation has changed for 2010/11.  If you wish to send a paper Return this must be received by 31 October 2011.  Please see attached penalty guidance for further information. 

If you wish to file the Trust Return online please note that this can be done using 3^rd party software which you will need to purchase.”

The words in bold are as shown on the letter: they are not the Tribunal’s emphasis.

"We have sent you this paper form to fill in, but you can also file the tax return online using our Internet service (you will need to use commercial software which you may have to buy).

Make sure the tax return, and any documents we ask for, reach us by:

·        31 October 2011 if you want us to calculate the trust or estate's tax or if you file a paper tax return, or both, or

·        31 January 2012 if you file the return online."

"We tried to file the return online well before what we believe was the deadline.  It then transpired that the Revenue feel that we should have to purchase commercial software to enable us to do this.  We feel strongly that this is a failure by the Revenue.  We obviously did not know this is going to be a problem until we tried to do it by which time it would have gone past the paper filing deadline.  We have since appealed the penalty copies of letters enclosed.  Our final letter of 9 July 2012 was asking the Revenue to review this case again as it is going to take up the Revenue's time, our time doing the tribunal application and will cost the taxpayers more money than cancelling the £100 fine.  We had not heard from the Revenue so we tried to ring the Revenue on the phone number on the letter dated 2 July 2012 and this was the self-assessment helpline.  We felt it needed to be a more significant Department so we rang agents dedicated section for guidance.  They gave us a trust number.  First attempt here left us in a queue.  Then call went dead.  Second phone call we found out a letter (dated 13 July 2012) was on the way to us telling us to continue with appeal.  Surely this is a waste of everyone's time.  We agree if we tried to file it late then fair comment.  But due to the software issue, this should be reviewed and the penalty cancelled as the Revenue is wasting taxpayers' money."

The legislation

"(1) For the purpose of establishing the amounts in which the relevant trustees of a settlement, and the settlors and beneficiaries, are chargeable to income tax and capital gains tax for a year of assessment, and the amount payable by him by way of income tax for that year, an officer of the Board may by a notice given to any relevant trustee require the trustee—

(a) to make and deliver to the officer. . ., a return containing such information as may reasonably be required in pursuance of the notice, and

(b) to deliver with the return such accounts, statements and documents, relating to information contained in the return, as may reasonably be so required;

and a notice may be given to any one trustee or separate notices may be given to each trustee or to such trustees as the officer thinks fit.

….

(1B) A return under this section for a year of assessment (Year 1) must be delivered—

(a) in the case of a non-electronic return, on or before 31st October in Year 2, and

(b) in the case of an electronic return, on or before 31st January in Year 2."

"(1)     Liability to a penalty under any paragraph of this Schedule does not arise in relation to a failure to make a return if P satisfies HMRC or (on appeal) the First-tier Tribunal or Upper Tribunal that there is a reasonable excuse for the failure.

(2) For the purposes of sub-paragraph (1)—

(a) an insufficiency of funds is not a reasonable excuse, unless attributable to events outside P's control,

(b) where P relies on any other person to do anything, that is not a reasonable excuse unless P took reasonable care to avoid the failure, and

(c) where P had a reasonable excuse for the failure but the excuse has ceased, P is to be treated as having continued to have the excuse if the failure is remedied without unreasonable delay after the excuse ceased."

Discussion

GUY BRANNAN

TRIBUNAL JUDGE

RELEASE DATE: 1 May 2013