First-tier Tribunal (Tax)

This considers an appeal against a penalty of £199 levied by HMRC for the late payment of income tax of £3,992.50 for the year 2011-2012 due to be paid by 31 January 2013.

Finance Act 2009 Schedule 56

Taxes Management Act 1970, in particular Sections 7, 8, 9, and 59B

Under the terms of The Taxes Management Act 1970 Section 59B (4) the due date for payment of the tax was 31 January 2013.

A late payment penalty is chargeable where a taxpayer is late in paying tax due. The first penalty is calculated at 5% of all remaining tax unpaid after the expiry of 30 days from the due date in accordance with paragraphs 1(1), 1(4) and 3 (2) of Schedule 56 of the Finance Act 2009.

Thus in the case of the appellant a penalty of 5% of £3,992.50 is due. That is £199.62 which HMRC have rounded down to £199.

In respect of levying a penalty for late payment HMRC allow 30 days grace during which the penalty can be avoided by making payment. Thus if the appellant had made payment before 3 March 2013 no late payment penalty would have been levied.

The appellant wrote to HMRC on 9 April 2013. The letter included the following:

“When I submitted my self assessment tax return I elected for HMRC to recover any outstanding money via an adjustment of my coding.

It follows that because I had made that decision I was not expecting any correspondence of significance as a result of submitting my tax return, this relevant because I moved out of Fowley Common Lane on the 3^rd March 2013.

The reason for moving was the company I worked for was sold to An American organisation in early February 2013 and I have spent a great deal of time in America since February which explains why I was not aware of the letters from HMRC dated 7^th March,19^th March and the most recent dated 28^th March.

“I was astonished when my original appeal was rejected and the decision maker..….. for reasons best known to herself chose to completely ignore the fact that in completing my online assessment I selected at the appropriate part in the process to have any under/overpayments made good by way of adjustment to my tax code.

As you will know, it’s only at the very end of the process is the under / over payment value calculated and this time round it calculated an under payment of £4003.98. As far as I was concerned that amount would be recovered via a tax adjustment and that was it.

I could not have at that point in time had any reasonable grounds to believe my selection of recovery via may tax code would not take place. The software accepted my selection and at the point that the calculation was made there was no warning or error code generated to flag up this amount was deemed to be too large to recover via my tax code…”

HMRC say the appellant’s electronic return for the year 2011-2012 was received on 29 January 2013. They say the appellant “chose to calculate his liability and therefore knew the sum to pay by the due date and filed online whereby the liability was automatically calculated.

This appeal concerns a penalty for late payment of tax. The level of the penalties has been laid down by parliament and the legislation relating to penalties has been properly and accurately applied by HMRC. The only other consideration that falls within the jurisdiction of the First-tier Tribunal is whether or not the appellant has reasonable excuse for the late payment.

You must make sure we receive your tax return by

·    31 October 2012 if you use paper (or three months after the date of this letter if that’s later)

·   31 January 2013 if you file online (or three months after the date of this letter if that’s later). If you owe less than £3,000 tax for 2011-12 we will try to collect it through your 2013-14 PAYE tax code if you have one. If you want us to do this you must file online by 30 December 2012.

15. These guidelines are repeated in the “Fill in your return” section of the online filing process.

16.The appellant has accused the decision maker from HMRC of completely ignoring the selection for payment he had made. The decision maker had no choice because unfortunately the appellant, for reasons best known to himself, had completely ignored the important guidelines which were clearly advised to him both on the front page of the Self Assessment Notice to complete a tax return and during the online filing process. The first guideline the appellant failed to notice was that in order for tax to be collected by code adjustment in the next tax year the return should be filed online by 30 December 2012, the appellant did not file his return online until 29 January 2013 so he should have known that having missed the deadline for the coding adjustment he would therefore have to pay the tax by 31 January 2013. The second guideline the appellant missed was that the coding option is only available “if you owe less than £3,000 for 2011-2012” As the appellant’s online submission showed an underpayment well in excess of that figure he should have realised that he would have to make a payment.  The appellant had therefore been given reasonable grounds to believe his selection of payment by adjustment of his tax code would not take place. The appellant could also have checked his up to date position by using the Self assessment Online Service described above. The deadline date for payment of 31 January 2013 was before the appellant left for America so his absence abroad during February 2013 cannot be an excuse for the failure to pay by that date. In the circumstances the Tribunal cannot accept that the appellant had a reasonable excuse for failing to pay the tax by the due date.

PETER R. SHEPPARD

TRIBUNAL PRESIDING MEMBER

RELEASE DATE: 20 December 2013