First-tier Tribunal (Tax)

[2014] UKFTT 715 (TC)

TC03836

Appeal number: TC/2014/02556

PAYE –employer’s annual return – penalty for late submission – whether reasonable excuse

FIRST-TIER TRIBUNAL

TAX CHAMBER

The Tribunal determined the appeal on 18.07.2014 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 08.05.2014 (with enclosures) and HMRC’s Statement of Case submitted on 30.05.2014 (with enclosures).

© CROWN COPYRIGHT 2014

DECISION

1.             The Tribunal decided that the Late Filing Penalty Notice dated 23.09.2013 in the (reduced) sum of £100 was properly issued by the Respondents.

2.             The appeal is dismissed.

3.             The Tribunal found that the filing date for the Appellant’s Employer Annual Return for the year 2012-2013 (forms P35 and P14) was 19.05.2013. The Return was filed electronically on 27.01.2014 i.e. some eight months late.

4.             The Tribunal further found that there was no reasonable excuse for the late filing of the Annual Return.

5.             It has been noted that penalties in the total sum of £800 have already been mitigated by the Respondents down to £100.

6.             The Notice of Appeal is silent as to the Grounds for Appeal but it appears that the Appellant’s agent has argued that he was unaware that a PAYE scheme was not in operation for the Appellant but such a scheme was registered on 01.07.2014. This does not alter the fact that the Return should have been filed some six weeks previously.

7.             The fact that there was no liability to account for any tax or National Insurance Contributions has no bearing on the matter of filing the Annual Return: there was an obligation to file it in a timely manner whether any tax or National Insurance Contributions were payable or not.

8.             Likewise, the fact that the Respondents have suffered no loss as a result of the late filing of the Return has no bearing on the matter in issue.

9.             The Appellant had an employee and details of that employee’s earnings had to be disclosed on the Annual Return. Ignorance of legal obligations does not relieve an employer from the duty to adhere to those obligations. The Tribunal is satisfied that the Respondents have widely publicised the details of those obligations and the Appellant should have been aware of the legal requirements. The mistake may have been an honest one but this does not amount to a reasonable excuse.

10.         The test applied by the Tribunal in considering the matter of reasonable excuse is whether the exercise of reasonable foresight and of due diligence and a proper regard for the fact that the Return would become due on a particular date would not have avoided the default. The facts and chronology of events, set out in the Notice of Appeal and the Respondents’ Statement of Case, disclose that such foresight and diligence by the Appellant would have avoided the default.

11.         In so far as the Appellant may suggest that the imposition of the penalty is disproportionate, unjust or unfair, those arguments have already been disposed of by the Upper Tribunal in HMRC v Hok UKUT 363 (TCC) and HMRC v Total Technology (Engineering) Limited UKUT 418 (TCC). In the former it was made clear that the First-tier Tribunal has no jurisdiction to determine the fairness of a penalty imposed by statute. It is plain from a perusal of the latter that a penalty of the magnitude of that imposed in this case could not be described as disproportionate even if the Tribunal had jurisdiction to deal with the issue.

12.         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.

WDF COVERDALE

TRIBUNAL JUDGE

RELEASE DATE: 23 July 2014