First-tier Tribunal (Tax)

[2014] UKFTT 485 (TC)

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TC03611

Appeal number: TC/2013/09502

PAYE – late submission of P35 Return – whether reasonable excuse – No – Penalty confirmed and Appeal dismissed

FIRST-TIER TRIBUNAL

TAX CHAMBER

Sitting in public at North Shields, on Wednesday 14 May 2014

In this appeal the appellant company was represented by its director, Mr Castlehow, and its agent/accountant, Mr Ingram, who made submissions on its behalf

Mr Aidan Boal, Presenting Officer for HMRC, appeared for the Respondents

© CROWN COPYRIGHT 2014

DECISION

1.             The appeal relates to the late electronic submission of the appellant’s P35 Return for 2012/13, which was due by 19 May 2013. It was not received electronically until 28 August 2013 and was accordingly over three months late.  A penalty of £400 was accordingly imposed.  P35 Returns require to be submitted electronically:  Income Tax (PAYE) Regulations 2003, no 205.

2.             Mr Boal explained that when these Returns are filed electronically a response is issued by HMRC indicating whether it has been logged successfully or not.  The person submitting the Return is advised to print off a copy to confirm a successful submission (see Guidance at 39-40).  No such evidence had been produced by the appellant.  Mr Ingram, its adviser, claimed that he believed that the form had been submitted successfully on 19 March 2013.  Why, in that event, had he not challenged the reminder dated 24 March (pA1) and the further reminder dated 28 April 2013 (A2-3), Mr Boal wondered.  Previous Returns for the taxpayer had been filed electronically successfully.

3.             Mr Ingram, who acts as the appellant company’s accountant, explained that he had submitted P35 Returns for the appellant company and other clients on 19 March.  He uses a third party software which has proved reliable.  It was not his practice to print off individual receipts from HMRC:  rather they were totalled in number and checked against the number of P35s submitted.  The receipts did not show the name of the individual taxpayer, he explained, just a reference number.  He accepted now that HMRC did not receive the P35 for 2012/13 for the appellant, but he believed that it had been filed successfully at the time.  He referred to the record at pA9 prepared on his software on behalf of the appellant company.

4.             However, in early May 2013, Mr Ingram continued, he had submitted a paper Return to HMRC, providing all the information required.  He considered that this was sufficient given that it had been received before 19 May.  HMRC in August had asked him to submit a fresh electronic Return.  After some further discussions with HMRC it was eventually submitted successfully on line on 28 August.

5.             In reply Mr Boal explained that a P35 Return could be submitted only once electronically.  As it had been submitted successfully on 28 August 2013, that indicated that it had not been submitted earlier.  He stressed that Regulation 205 imposed the requirement to submit electronically:  paper form was not acceptable.  He emphasised HMRC’s record for 5 July 2013 (A4) indicating that the appellant company had been instructed to resubmit the P35.  Had that been done promptly a lower penalty of £200 would have been appropriate.

6.             In his concluding remarks Mr Ingram considered that the company had more than a reasonable excuse.  There had been the intention to submit the P35 containing all the relevant information all along.  The necessary information had been provided timeously albeit on paper.  The receipts following successful electronic submission did not give a client name, only a reference.  The failure was merely a technical glitch, he claimed.

Decision

7.             It is acknowledged that the Return was not filed electronically until 28 August 2013.  The issue for us to determine therefore is whether the appellant company had a reasonable excuse for the failure.  The narrative set out on behalf of both the appellant and respondents was not disputed in material respects.

8.             While the error was attributable to Mr Ingram as agent, the responsibility remains with the taxpayer.  We accept that the necessary information was provided in paper form by the due date of 19 May but Regulation 205 requires its electronic submission.  After the reminders of 24 March and 28 April there was ample opportunity to attempt again to submit the Return electronically.  Even if it had been done promptly after 5 July, the penalty would have been halved.  Mr Ingram should have appreciated this as an experienced agent, familiar with the requirement of electronic filing.  We cannot understand why he “negotiated” over the matter with HMRC at that stage when he could simply have re-attempted to file the Return electronically.  His system which did not check electronic receipts individually, failed in the circumstances.  There is no satisfactory evidence of a technical “glitch” affecting the exercise.

9.             We do not consider that a reasonable excuse arises, and we confirm the Penalty and dismiss the Appeal.

10.         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.

KENNETH MURE QC

TRIBUNAL JUDGE

RELEASE DATE: 22 May 2014