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First-tier Tribunal (Tax)
You are here: BAILII >> Databases >> First-tier Tribunal (Tax) >> Abdulla v Revenue and Customs (INCOME TAX - Individual Tax Return) [2017] UKFTT 353 (TC) (24 April 2017)
URL: http://www.bailii.org/uk/cases/UKFTT/TC/2017/TC05827_2.html
Cite as: [2017] UKFTT 353 (TC)
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[2017] UKFTT 353 (TC)
TC05827
Appeal number: TC/2013/004897
Income Tax - Individual Tax Return – Late Filing - Daily Penalties - 6 Month Penalty - Reasonable Excuse - No- Appeal dismissed
FIRST-TIER TRIBUNAL
TAX CHAMBER
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HARETH ABDULLA |
Appellant |
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- and - |
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THE COMMISSIONERS FOR HER MAJESTY’S |
Respondents |
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REVENUE & CUSTOMS |
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TRIBUNAL: |
JUDGE JENNIFER A TRIGGER |
The Tribunal determined the appeal on 12 April 2017 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 19 July 2013 (with enclosures), HMRC’s Statement of Case (with enclosures) acknowledged by the Tribunal on 8 February 2017 and the Appellant’s Reply acknowledged by the Tribunal on 28 February 2017
© CROWN COPYRIGHT 2017
DECISION
Introduction
1. This is an appeal against a Late Filing Penalty (the “Penalty”), Daily Penalties (the ”Penalties”) and a 6 Month Penalty (the “6 Month Penalty) imposed under Paragraph 3, Paragraph 4, Paragraph 5 of Schedule 55 Finance Act ( the “FA”) 2009 for the late filing of an Individual Tax Return for the tax year ending 5 April 2011.
2. This an appeal, also, against a Late Filing Penalty (the “Penalty”) imposed under Paragraph 3 of Schedule 55 of the FA 2009 for the tax year ending 5 April 2012
3. The First-tier Tribunal directed that the appeal should be stood over until the decision of the Court of Appeal in the case of Donaldson v Commissioners for Her Majesty’s Revenue and Customs [ 2016 ] EWCA Civ. 761 ( the “Donaldson case”) was finalised. Thereafter, the Supreme Court refused to permit any further appeal in the Donaldson case and accordingly, the Appellant’s appeal was listed for determination.
4. On 12 April 2017 the Tribunal decided that the appeal was unsuccessful.
Background Facts
5. For the year ending 5 April 2011, Hareth Abdulla (the “Appellant”) was required to file a return either electronically by 31 January 2012 or non-electronically by 31 October 2011. The Appellant chose to file electronically. The return was received by HMRC on 5 March 2013.
6. As the return was not received by the filing date HMRC issued a notice of penalty assessment on or around 24 February 2012 in the amount of £100.00, the Penalty.
7. As the return had still not been received by HMRC three months after the penalty date, HMTC issued a notice of daily penalty assessment on or around 9 October 2012 in the sum of £900.00, the Penalties, calculated at the daily rate of £10.00 for 90 days.
8. As the return has still not been filed 6 months after the penalty date, HMRC issued a notice of penalty assessment on or around 16 October 2012 in the amount of £300.00, the 6 Month Penalty.
9. For the year ending 5 April 2012 the Appellant was required to file a return either electronically by 31 January 2013 or non-electronically by 31 October 2012. The Appellant chose to file non-electronically on 26 November 2013.
10. As the return was not received by the filing date HMRC issued a notice of penalty assessment on or around 4 December 2012 in the amount of £100.00, the Penalty.
11. On 26 February 2013 the Appellant’s agent, CEJ Accounts Ltd, ( the “Agent”) appealed to HMRC against the Penalty, the Penalties and the 6 Month Penalty, for the tax year ending 5 April 2011.
12. The Agent appealed, also, to HMRC the Penalty for the tax year ending 5 April 2012 on 26 February 2013.
13. Both of the appeals were rejected by letter dated 17 April 2013 but HMRC offered a review in each appeal.
14. On 19 July 2013 the Appellant lodged a Notice of Appeal to HM Courts and Tribunal Service.
The Appellant’s Case
15. The Appellant accepted that the returns for the tax years 2010-2011 and 2011-2012, (the “Returns”), had been filed late but claimed that there was a reasonable excuse.
Findings of Fact.
16. That the Appellant had filed the Returns late.
17. That HMRC had correctly calculated the Penalty, the Penalties and the 6 Month Penalty for the tax year 2010-2011 and the Penalty for the tax year 2011-2012.
18. That the Appellant had failed to establish a reasonable excuse.
19. That HMRC had made a decision required by Paragraph 4 (1) (b) of Schedule 55 FA 2009 to charge the Penalties.
20. That HMRC had given notice required under Paragraph 4 (1) (c) of Schedule 55 FA 2009 specifying the date from which the Penalties were payable.
21. That HMRC had failed to specify the period in respect of which the Penalties were assessed in the notice of assessment required under Paragraph 18 of Schedule 55 FA 2009. Despite that omission of the correct period, for which the Penalties had been assessed in the notice of assessment, the validity on the notice was not affected.
22. That the Penalty, the Penalties and the 6 Month Penalty for the tax year 2010-2011 and the Penalty for the tax year 2011-2012 were not criminal in nature for the purpose of Article 6 of the European Convention on Human Rights (the “ ECHR.”)
23. That the Penalty, Penalties and the 6 Month penalty for tax year 2010-2011 were not disproportionate and nor was the Penalty for tax year 2011-2012 and that the penalty regime was proportionate in its aim.
24. That there were no special circumstance which would support a Special Reduction under Paragraph 16 of Schedule 55 FA 2009.
The Legislation
25. Taxes Management Act 1970 section 8.
26. Schedule 55 FA 2009 Paragraphs 1, 3, 4, 5, 6(1), 6(5), 16, 18, 20, 21, 22 and 23.
27. Interpretation Act 1978 section 7.
Reasons for the Decision
28. The return was filed electronically on 5 March 2013, when the correct date for electronic submission for tax year 2010-2011 was 10 April 2012. The return was filed non-electronically on 26 November 2013, when the correct date for non-electronic submission for tax year 2011-2012 was 31 October 2012.
29. As the Returns were late the Penalty was calculated under Paragraph 3 of Schedule 55 FA 2009 which specified the amount as £100.00, for each return. The Penalties were calculated under Paragraph 4 of Schedule 55 FA 2009 at £10.00 per day. The return for the tax year 2010-2011 was filed 90 days late. The 6 Month Penalty was calculated under Paragraph 5 of Schedule 55 FA 2009 at £300.00.
30. The Appellant claimed a reasonable excuse. He maintained that he had not received the request to submit a self-assessment tax return for the 2010-2011 tax year “until the submission of 5 April 2012 return.” “For 5 April 2012 the self- assessment paper return was filed in November 2012. As the return was not issued the return was not late due to the 3 month period not expiring”.
31. The Tribunal found that HMRC had issued a Notice to File for the tax year 2010-2011 to the Appellant on 3 January 2012 and a full tax return on 6 April 2012. The forms were issued to the Appellant via the Royal Mail and were not returned to HMRC as undelivered. Reminder letters were sent to the Appellant on14 August 2012 and 11 September 2012. Neither of these letters were returned to HMRC. HMRC in general knew when correspondence was not delivered as it was returned to HMRC under its Returned Mail Service with the Royal Mail.
32. There was no record of any mail having been returned as undelivered from the address held by HMRC for the Appellant. The Tribunal decided that it was highly unlikely that the Appellant had not received a Notice to File or the reminder letters. There could be reasonable excuse on the facts as given by the Appellant. The Tribunal relied on section 7 of the Interpretation Act 1978.
33. Furthermore, HMRC’s records showed that the Appellant completed a form SA1 “Registering for Self –Assessment”. A tax return as a company director was filed with HMRC on 20 December 2011.The Appellant had requested a tax return and accordingly should have taken action if it seemed to him that the form SA1 had not been actioned by HMRC. The Appellant telephoned HMRC on 13 December 2012 and was advised, at that time, about the Penalties and that the return for 2010-2011 was outstanding. The Appellant had shown, in the opinion of the Tribunal, that he was aware that he was required to register for self-assessment by completing form SA1 but failed to meet his tax obligations under self-assessment because he did not file his returns by the deadlines.
34. A reasonable excuse must be an event that is unforeseen, unexpected or outside the taxpayers control. There were no such features in the Appellant’s appeal.
35. The Tribunal was bound to follow the decision in the Donaldson case in respect of the decision of HMRC to impose the Penalty and the Penalties and the giving of notice in respect of the latter and similarly relied on the Donaldson case on the issue of HMRC’s omission to specify the relevant period.
36. The failure to file the return was not criminal in nature but administrative and no proof of qualitative misconduct was required. The Penalty and the Penalties were simply a means of securing the production of timely returns. So Article 6 of the ECHR did not apply.
37. The Penalties were neither harsh nor plainly unfair. The Tribunal relied on International Roth GmbH v SSHD [2002] EWCA Civ 158 in reaching this decision.
38. There were no exceptional, abnormal or unusable circumstances nor was there something out of the ordinary run of events to justify a Special Reduction. The Appellant had merely delegated his tax affairs and his general financial matters to his wife and his accountants.
31 For the reasons given the appeal was not successful. The Appellant must pay to HMRC the sum of £1400.00
32 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.
JENNIFER A TRIGGER
TRIBUNAL JUDGE
RELEASE DATE: 24 APRIL 2017