First-tier Tribunal (Tax)

[2013] UKFTT 409 (TC)

TC02805

Appeal number: TC/2012/08656

INCOME TAX application to make a late appeal against  assessment – Tribunal found that appellant had arguable case that assessment was too high – appeal made late due to misleading advice from HMRC and accountant – in interest of fairness and justice application to make late appeal is allowed

FIRST-TIER TRIBUNAL

TAX CHAMBER

Sitting in public at Colchester on 15 April 2013

The Appellant in person

Miss Karen Weare, officer of HMRC, for the Respondents

© CROWN COPYRIGHT 2013

DECISION

1.             This is application for permission to make a late appeal under Section 49 Taxes Management Act 1970

Background and facts

2.             The appellant was subject to an enquiry for 2009-2010 which was opened on 2 June 2011. The enquiry was into one point – a loss claim.

3.             The appellant incurred a trading loss of £51,985 to cessation of his work as a dispensing optician for Dolland and Aitchison on 3 April 2009. £31,111 was carried back and set against his profit for 2008. Of the balance of the £20,874 loss, £15,838 was claimed against the profit for 2010. It is this claim that was disallowed on the basis that it was a terminal loss which could not be carried forward to a different trade.

4.             William Anang of W T Anang and Co acted for the appellant in the enquiry. On 22 August 2011 the agent wrote agreeing that the loss could not be used as claimed and an amended self-assessment issued on 16 November 2011 showed that the appellant was due to pay £2,682.44.

5.             The appellant confirmed that he had always been a self-employed dispensing optician and had always been a sole trader.

6.             He had been misinformed by his accountants who told him that the losses could not be carried forward because working as a locum dispensing optician was different to working as a self-employed franchisee dispensing optician for Dolland Aitchison.

7.             The appellant stated that he made a loss in each month that he worked for Dolland Aitchison (“DA”) as he had to pay DA each month that he worked for them but his accountant omitted these amounts from the accounts until the last period.

8.             The appellant stated that he did not understand the tax system and he had been told that the losses could not be carried forward because his locum job was different from what he did at DA.

9.             He contacted Sean Mica of HMRC in November 2011 who informed the appellant that he could not appeal and that HMRC intended to sue for bankruptcy if the appellant did not pay the tax owed.

10.         However on 18 April 2012 the application by the appellant for the Statutory Demand to be set aside was adjourned by the District Judge who ordered that HMRC should respond to the appellant’s submission that as he had remained in the same trade he was entitled to have the losses set aside against the tax claimed by HMRC. 

11.         The appellant stated that after this ruling by the judge he realised that he could appeal and so he did so.

12.         He had not done so previously because the accountant and Mr Micah had told him that there was no point in doing so.

Appellant’s submissions

13.         The appellant submitted that if the accountant had claimed the losses that he made each month whilst working for DA the problem would not have arisen.

14.         The appellant submitted that he had in any event been in the same trade allalong that of a dispensing optician.

15.         The appellant submitted that he would have appealed in time if he had not been informed by Mr Micah of HMRC that he could not do so.

16.         The appellant submitted that there was prejudice to him if he was not allowed to pursue the appeal.

HMRC’s submissions

17.         Miss Weare submitted that HMRC believed that it had interpreted the legislation correctly and that the appellant had pursued two different trades, one of a franchisee dispensing optician and one of a locum dispensing optician.

18.         Miss Weare submitted that therefore HMRC thought that there was no merit in the appeal.

19.         Miss Weare submitted that it was clear that if the Tribunal did give permission for the late appeal the matter would ultimately have to be decided by the Tribunal.

20.         Miss Weare accepted that if the Tribunal gave permission for a late appeal it would be open to the appellant to have a review of the conclusion which could be appealed to the Tribunal if not in the appellant’s favour or alternatively the substantive appeal could continue to Tribunal without a review.

Findings

21.         The Tribunal found that it was arguable that the losses should have been allowed.

22.         The Tribunal found that on the evidence provided the appellant had continued in his trade as a self-employed dispensing optician throughout.

23.         The Tribunal found that the appellant had wrongly been discouraged from appealing until the District Judge appeared to think that HMRC had a case to answer.

24.         As a result of this the Tribunal found that the appellant had a reasonable excuse for making the late appeal.

25.         The Tribunal found that there was merit in the appellant’s appeal and in the interest of fairness and justice the appellant ought to be allowed to pursue an appeal.

Decision

26.         The appellant’s application to make a late appeal against the tax assessment of £2682.44 is hereby allowed.

27.         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.

SANDY RADFORD

TRIBUNAL JUDGE

RELEASE DATE: 26 July 2013