First-tier Tribunal (Tax)

[2014] UKFTT 0137 (TC)

TC03277

Appeal number: TC/2013/06952

PAYE – LATE LODGING OF EMPLOYER’S ANNUAL RETURN – AGENTS BELIEVED RETURN HAD BEEN SUCCESSFULLY FILED – REMINDER AND PENALTY NOTICES ISSUED – PROBLEMS WITH THIRD-PARTY SOFTWARE – RETURN STILL NOT FILED - WHETHER REASONABLE EXCUSE - NO – APPEAL DISMISSED

FIRST-TIER TRIBUNAL

TAX CHAMBER

The Tribunal determined the appeal on 20 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 8 October  2013 (with enclosures), and HMRC’s Statement of Case submitted on 12 November 2013(with enclosures).

© CROWN COPYRIGHT 2014

                                                         DECISION

1 The appellants  appeal against the decision of HMRC to impose penalties of £1200  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 2012. The Annual Return was to be filed online by  19^th May 2012.

2. On 11 October 2012 the appellants’ accountants wrote to HMRC saying that they had filed the return online on 19 April 2012 via their IRIS Payroll Software. They said it was not possible to resubmit the return and offered to complete a paper copy if a form could be provided.

 3. HMRC say that there is no record of a return having been submitted online. Although the appellants do not fit one the few categories of taxpayer  exempt from filing online and entitled to submit a paper return they had sent  the appropriate form for completion on 9 January 2013 but it had not been completed and filed. They say that when an attempt is made to file a return online one of two messages is sent – one confirming successful filing and the other rejecting it. In the absence of one or other of these messages it was unreasonable for the appellants or their agents to assume that the return had been successfully filed. They point out that they do not endorse third-party software such as that used by the appellants’ agents  and once the appellants became aware, on receipt of the first reminder issued  in late May or early June 2012, the appellants or their agents ought to have tried an alternative system if they could not resubmit the return using IRIS. Even when alerted to the fact that the return had not been filed the appellants failed to submit the return. or to contact HMRC’s Helpdesk. They say that they do not consider ‘a dilatory agent’ as a reasonable excuse and 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   put 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. The appellants were apparently sent a reminder in late May or early June and the first penalty notice was issued in September 2012. At the time of the submission of the Statement of Case the return had still not been filed either online or in paper form, despite the fact that a form had been issued. I agree that one would have expected the agents to make some check to make sure that the return had been successfully filed and indeed that they would have expected to see an acceptance or rejection message. It seems to me that no  reasonable excuse has been offered for the failure to file the return on time.  

6. 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: 28 January 2014