First-tier Tribunal (Tax)

[2014] UKFTT 119 (TC)

TC03259

Appeal number: TC/2012/03515

PAYE – LATE LODGING OF EMPLOYER’S ANNUAL RETURN – APPELLANTS BELIEVED IT HAD BEEN SUCCESSFULLY FILED- FAILURE OF HMRC TO ADVISE  APPEALLNTS SOONER THAT RETURN NOT SUCCESSFULLY FILED - WHETHER REASONABLE EXCUSE - NO – APPEAL DISMISSED

FIRST-TIER TRIBUNAL

TAX CHAMBER

The Tribunal determined the appeal on 3 January  2014 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 24 February  2012 (with enclosures), and HMRC’s Statement of Case submitted on 6 June 2013(with enclosures).

© CROWN COPYRIGHT 2014

DECISION

1 The appellants  appeal against the decision of HMRC to impose penalties of £500  in terms of Section 98A (2) and (3) of the Taxes Management Act 1970,  for late submission of the Employer’s Annual Return for the tax year ending  5^th April 2011. The Annual Return was to be filed online by  19^th May 2011.It was filed online on 4 October 2011.

2. The appellants maintain that their return was submitted online on 6 April 2011. They had received the Penalty Notice on 30 September 2011 and prior to that had been unaware that the  return had not been received. If they had been advised sooner  they could have remedied the situation and the penalty would  not have been so high. They do not think they should be penalised for some sort of computer system communication failure.

 3. The position of HMRC is that the return should have been submitted by 19 May 2011 and was not. They note that the appellants had in previous years filed successfully online. They accept that ‘a Movement form’ was filed online on 6 April 2011 but not the return. HMRC explain the system for filing, pointing out in particular that a message is sent if the return  has been successfully processed and an e-mail message also sent. Failure to receive either of these should have alerted the appellants to the fact that the return had not been successfully submitted. Guidance on how to check the status of a submission is available online. In response to the complaint  about the length of time taken to issue the penalty notice HMRC point out that they are under no obligation to issue penalty notices and the level of penalty is set down in statute. HMRC refer to the decision in HMRC v Hok Ltd [2012] UKUT 363. They conclude that the appellants have not established that on a balance of probabilities there is a reasonable excuse for their failure to file their return on time.

4. I have given careful consideration to the evidence before me. If a person is to rely on reasonable excuse, this must have existed for the whole of the period of default. A reasonable excuse is normally an unexpected or unusual event, either unforeseeable or beyond the person’s control, which prevents him from complying with an obligation when he otherwise would have done. The matter has to be considered in the light of the actions of a reasonable prudent tax payer exercising foresight and due diligence and having proper regard for his responsibilities under the Taxes Act.  

5. I accept that the appellants believed that they had filed their return but they had not. It seems to me to be not unreasonable to have expected them to have taken some action to check whether the return had been successfully submitted. I can understand their annoyance that they were not made aware of the failure until September but on the basis of the decision of the Upper Tribunal in Hok there is no merit in a submission that a delay of four months by HMRC in issuing a penalty notice  is unreasonable or that they were under an obligation to reduce the penalty.

6. I find therefore that the appellants have not established that they have a reasonable excuse for late filing and I dismiss the appeal.

7.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.

N A BAIRD

TRIBUNAL JUDGE

RELEASE DATE: 20 January 2014