First-tier Tribunal (Tax)

[2020] UKFTT 136 (TC)
TC07632

INCOME TAX - Schedule 55 Finance Act 2009 - fixed and daily penalties for failure to file a self-assessment return on time - whether taxpayer had a reasonable excuse for his default - appeal dismissed. Permission to appeal out of time - refused."

FIRST-TIER TRIBUNAL TAX CHAMBER

Appeal number:  TC/2019/06574

 

BETWEEN

 

azim uddin azir

Appellant

 

 

-and-

 

 

THE COMMISSIONERS FOR HER MAJESTY’S REVENUE AND CUSTOMS

Respondents

 

 

 

TRIBUNAL:

JUDGE Abigail HUDSON

 

 

The Tribunal determined the appeal on 17 February 2020 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 10 October 2019 (with enclosures), HMRC’s Statement of Case (with enclosures) acknowledged by the Tribunal on 2 December 2019.

 

DECISION

INTRODUCTION

1.      This is an appeal by Mr Azim Uddin Azir (‘the Appellant’) against fixed and daily penalties totalling £850 imposed by the Respondents (‘HMRC’) under Paragraph 3 and 4 of Schedule 55 Finance Act 2009, for his failure to file a self-assessment (‘SA’) tax return on time for the tax year ending 5 April 2016.

BACKGROUND

2.      The Appellant’s return for 2015-16, was due if filed electronically no later than 31 January 2017.

3.      The penalties for late filing of a return can be summarised as follows:

(i) A penalty of £100 is imposed under Paragraph 3 of Schedule 55 Finance Act (‘FA’) 2009 for the late filing of the Individual Tax Return.

(ii) If after a period of 3 months beginning with the penalty date the return remains outstanding, daily penalties of £10 per day up to a total of £900 are imposed under Paragraph 4 of Schedule 55 FA 2009.

(iii) If after a period of 6 months beginning with the penalty date the return remains outstanding, a penalty of £300 is imposed under Paragraph 5 of Schedule 55 FA 2009.

(iv) If after a period of 12 months beginning with the penalty date the return remains outstanding, a penalty of £300 is imposed under Paragraph 6 of Schedule 55 FA 2009.

4.      The Appellant’s electronic return for 2015-16 was filed on 14 July 2017.  It was therefore not filed on time and penalties of £100 and £750 were imposed, under (i) and (ii) above.  

Filing date and Penalty date

5.      Under s 8(1D) TMA 1970 a non-electronic return must normally be filed by 31 October in the relevant financial year or an electronic return by 31 January in the year following.   The ‘penalty date’ is defined at Paragraph 1(4) Schedule 55 FA 2009 and is the date after the filing date.

Reasonable excuse

6.      Paragraph 23 of Schedule 55 FA 2009, provides that a penalty does not arise in relation to a failure to make a return if the person satisfies HMRC (or on appeal, a Tribunal) that they had a reasonable excuse for the failure and they put right the failure without unreasonable delay after the excuse ceased.

7.      The law specifies two situations that are not reasonable excuse:

(a) An insufficiency of funds, unless attributable to events outside the Appellant’s control, and

(b) Reliance on another person to do anything, unless the person took reasonable care to avoid the failure.

8.      There is no statutory definition of “reasonable excuse”. Whether or not a person had a reasonable excuse is an objective test and “is a matter to be considered in the light of all the circumstances of the particular case” (Rowland V HMRC (2006) STC (SCD) 536 at paragraph 18).

9.      The actions of the taxpayer should be considered from the perspective of a prudent person, exercising reasonable foresight and due diligence, having proper regard for their responsibilities under the Tax Acts.  The decision depends upon the particular circumstances in which the failure occurred and the particular circumstances and abilities of the person who failed to file their return on time. The test is to determine what a reasonable taxpayer, in the position of the taxpayer, would have done in those circumstances and by reference to that test to determine whether the conduct of the taxpayer can be regarded as conforming to that standard.

10.  The onus lies with HMRC to show that the penalties were issued correctly and within legislation.  If the Tribunal find that HMRC have issued the penalties correctly the onus then reverts to the Appellant to show that he has a reasonable excuse for the late filing of his SA tax return.

The background facts

11.  The Appellant’s 2015-16 return was issued to him on or around 6 April 2016 and was due to be returned by 31 October 2016 or by 31 January 2017 if returned electronically.  The Notice to file a return was issued to the correspondence address provided by the Appellant.

12.  The Appellant’s grounds of appeal are that he erroneously believed that he did not have to file a return.  Accordingly, he had a reasonable excuse for the delay in filing.

13.  The SA return was received electronically by HMRC on 14 July 2017.  It was 164 days late.

14.  HMRC imposed a fixed penalty of £100 together with daily penalties [at £10 for each day, totalling £750].  

15.  The Appellant appealed to the Tribunal on 10 October 2019.  

PERMISSION TO APPEAL OUT OF TIME

16.  The appellant’s appeal to HMRC under s31A TMA 1970 was made outside the statutory deadline.  HMRC refused consent under s49(2)(a) of TMA 1970.  For the following reasons, I have decided not to give permission for the appeal to be notified late:

17.  A letter was sent to the Respondent dated 24 April 2019 by Siddique & Co Accountancy Ltd.  The letter purports to attach “an appeal letter” sent by “his previous accountant”.  HMRC have no record of an appeal letter from a previous accountant.  I have seen a letter dated 31 July 2017 in which Glory Rahman makes various assertions.  It appears that there was no further correspondence between any party until 24 April 2019.  No explanation has been provided to me as to why either Ms Rahman or Mr Azir would have failed to follow up on that letter for a period of 20 months.  The Appellant submitted his own return online for the 2016-17 tax return on 31 January 2018.  At the same time I would have expected him to notice from his online account that his penalties remained. 

18.  This letter in and of itself is somewhat unusual in that it is not on headed notepaper, and it is not clear who “S Rahman” is or in what capacity he or she represents Mr Azir.  The letter is dated 31 July 2017 but at that time, no representative was on record for Mr Azir, and had a representative corresponded in this way with the Respondent, Mr Azir would have been notified that the representative would have to be authorised before their correspondence could be acted upon.  I consider it likely that the letter did not reach the Respondent in or around July 2017.  It is thereafter unreasonable that Mr Azir, or his agent if that is what S Rahman was, would fail to chase up that appeal letter for nearly two years.  I do not accept that the previous appeal letter was sent to HMRC in July 2017.

19.  The appeal letter was therefore received on 29 April 2019.  The relevant penalty notices were dated 7 February 2017 and 18 July 2017, and were sent to the Appellant’s registered correspondence address.  Therefore the time limit for appealing expired on the 5 April 2017 and the 17 August 2017.  In relation to the latest penalties the Appellant is 620 days late in appealing to HMRC.  That in itself is serious and significant.  However, the appeal against the earlier penalty is 754 days late. 

20.  His application to appeal was refused and so he renewed his application on 22 August 2019.  That application was again refused and he appealed to the Tribunal on 10 October 2019.  The Appellant has not actually provided reasons for his late appeal, beyond arguing that his former agent submitted an appeal in 2017 which I have rejected above, and that he has a disability and experienced postal delays.  It is not clear to me what disability the Appellant is said to present with, however, he was able to establish himself as a sole trader in January 2018 and therefore evidently felt that he was capable of dealing with his tax affairs.  Whilst I do accept that postal delays can happen, I find it ludicrous to suggest that postal delays would cause two years of delay.

21.  The consequences to either party of an extension of time limits must be considered in light of my assessment of the merits of the substantive appeal.  The Respondent is entitled to some finality in properly administering the SA tax regime and the time limits have been imposed by statute to provide that finality.  The Appellant would be prejudiced by a refusal to extend the time limits, however, he has offered no good explanation for his delay in appealing, and I do not consider that the explanation given for his late filing of his return constitutes a reasonable excuse for either delay.

22.  In considering the application for permission to appeal out of time, pursuant to Data Select Ltd v HMRC [2012] UKUT 187 (TCC) I have considered:

a)      The length of the delay;

b)      Whether there is a good explanation for that delay;

c)      The consequences of permission to appeal;

d)     The consequences of refusal of permission.

23.  In the circumstance I do not consider that the Appellant has a good explanation for his delay which is of some significant length.  In balancing the prejudice caused to both parties, I conclude that it would be inappropriate to extend the time limit for appeal, and the application for permission to appeal out of time is refused.

The Appellant’s case

24.  The Appellant’s grounds of appeal are that he struggled to obtain the relevant documentation to complete his return and therefore filed as soon as he was able to do so.  Alternatively, that he did not realise that he was required to file, and filed upon realising his error. 

HMRC’s Case

25.  A late filing penalty is raised solely because a SA tax return is filed late in accordance with Schedule 55 FA 2009, even if a customer has no tax to pay, has already paid all the tax due or is due a refund.  

26.  Where a return is filed after the relevant deadline a penalty is charged.  The later a return is received, the more penalties are charged.

Reasonable Excuse

27.  Under Paragraph 23 (1) Schedule 55 FA 2009 liability to a penalty does not arise in relation to failure to make a return if the taxpayer has a reasonable excuse for failure.

28.  ‘Reasonable excuse’ was considered in the case of The Clean Car Company Ltd v The Commissioners of Customs & Excise by Judge Medd who said:

“It has been said before in cases arising from default surcharges that the test of whether or not there is a reasonable excuse is an objective one. In my judgment it is an objective test in this sense. One must ask oneself: was what the taxpayer did a reasonable thing for a responsible trader conscious of and intending to comply with his obligations regarding tax, but having the experience and other relevant attributes of the taxpayer and placed in the situation that the taxpayer found himself at the relevant time, a reasonable thing to do?” [Page 142 3rd line et seq.].

29.  HMRC considers a reasonable excuse to be something that stops a person from meeting a tax obligation on time despite them having taken reasonable care to meet that obligation.  HMRC’s view is that the test is to consider what a reasonable person, who wanted to comply with their tax obligations, would have done in the same circumstances and decide if the actions of that person met that standard.

30.  If there is a reasonable excuse it must exist throughout the failure period.

31.  The Appellant has not provided a reasonable excuse for his failure to file his tax return for the year 2015-16 on time and accordingly the penalties have been correctly charged in accordance with the legislation.

32.  The amount of the penalties charged is set within the legislation. HMRC has no discretion over the amount charged and must act in accordance with the legislation.  By not applying legislation and as such not to have imposed the penalty would mean that HMRC was not adhering to its own legal obligations.

Special Reduction

33.  Paragraph 16(1) of Schedule 55 allows HMRC to reduce a penalty if they think it is right because of special circumstances.  “Special circumstances” is undefined save that, under paragraph 16(2), it does not include ability to pay, or the fact that a potential loss of revenue from one taxpayer is balanced by a potential overpayment by another.

34.  In other contexts “special” has been held to mean ‘exceptional, abnormal or unusual’ (Crabtree v Hinchcliffe [1971] 3 All ER 967), or ‘something out of the ordinary run of events’ (Clarks of Hove Ltd v Bakers’ Union [1979] 1 All ER 152). The special circumstances must also apply to the particular individual and not be general circumstances that apply to many taxpayers by virtue of the penalty legislation (David Collis [2011] UKFTT 588 (TC), paragraph 40).

35.  Where a person appeals against the amount of a penalty, paragraph 22(2) and (3) of Schedule 55, FA 2009 provide the Tribunal with the power to substitute HMRC’s decision with another decision that HMRC had the power to make.  The Tribunal may rely on paragraph 16 (Special Reduction) but only if they think HMRC’s decision was ‘flawed when considered in the light of the principles applicable in proceedings for judicial review’.

36.  HMRC have considered the Appellant’s grounds of appeal but assert that his circumstances do not amount to special circumstances which would merit a reduction of the penalties.

37.  Accordingly, HMRC’s decision not to reduce the penalties under paragraph 16 was not flawed.  There are no special circumstances which would require the Tribunal to reduce the penalties.

FINDINGS OF FACT

38.  The notice to file was sent to the Appellant’s registered address on 6 April 2016.  That address remained registered to his SA account from 15 January 2016 to 12 March 2019, and was confirmed upon his 2014-15 return submitted on 31 January 2016, his 2015-16 return, and his registration for self-employment on 17 January 2018.  He was therefore registered at that address throughout the period of receipt of notice to file and the penalty notices.

39.  Penalty notices were sent to the same address on or around 7 February 2017 and 18 July 2017.  Statements of account were also sent to that address on 9 March 2017, 14 September 2017 and 8 March 2018.  The Debt Management and Banking team also sent letters on 12 October 2017, 23 February 2018 and 8 January 2019.

40.  On 14 March 2017 the Appellant called HMRC to pay a penalty.  He also telephoned on 12 April 2017 and made a penalty payment.  During that call he confirmed the address on record and was advised that his account was still accruing penalties because his return remained outstanding.

41.  It is agreed that the return was in fact submitted electronically on 14 July 2017.  The HMRC computer system does not allow a customer to submit a tax return for the same tax year twice.  Therefore, the return having been submitted on 14 July 2017 effectively, it must not have been submitted effectively prior to that.  I accept that the return was not properly submitted on or around 31 January 2017, or prior to 14 July 2017.

42.  A person is liable to a penalty if (and only if) HMRC give notice to the person specifying the date from which the penalty is payable.  I am satisfied that the penalty notices dated on or around 7 February 2017 and 18 July 2017 gave proper notice (Donaldson v The Commissioners for HM Revenue & Customs [2016] EWCA Civ 761) and were sent to the postal address linked to the Appellant’s SA account.

DISCUSSION

43.  Relevant statutory provisions are included as an Appendix to this decision.

44.  I have concluded that the tax return for the 2015-16 tax year was not submitted on time.  It should have been submitted by 31January 2017.  Subject to considerations of “reasonable excuse” and “special circumstances” set out below, the penalties imposed are due and have been calculated correctly.

45.  When a person appeals against a penalty they are required to have a reasonable excuse which existed for the whole period of the default. There is no definition in law of reasonable excuse, which is a matter to be considered in the light of all the circumstances of the particular case.  A reasonable excuse is normally an unexpected or unusual event, which prevents him or her from complying with an obligation which otherwise they would have complied with.

46.  A tax return was issued to the Appellant on 6 April 2016 to his home address.  That address has been confirmed as the correct address for communication on 31 January 2016, 12 April 2017, 17 July 2017 and 17 January 2018.  I am not told of any postal difficulties around the relevant time, and none of the postal communications have been returned undelivered.  I have therefore concluded that it is likely that the appellant would have received the notice to file.  Having been issued there is an obligation that it is submitted prior to the filing date, whether any tax is due or not. 

47.  Mr Azir appears from his notice of appeal to be stating that he did not believe he was required to file a return for the year 2015/16 because he left the partnership in July 2016.  He does not dispute that he was issued a notice to file and therefore I assume that he did receive that notice in April 2016.  It is implausible in my judgment that having received a notice to file, he would not have sought advice as to why he had received such a notice if not required to file.  It is further implausible that he would not have realised that the notice to file related to the period before he left the partnership in any event, and therefore considered himself obliged to file a return.  His completed return disclosed income from the partnership and so he must have been aware that having received income during that tax year, he would need to declare it.  Particularly in light of the fact that he filed a return in the previous year, having only been a partner within a partnership for a period of a few weeks in that tax year.

48.  In February 2017 a penalty notice would have informed him that he had accrued penalties.  It was a further five months before his return was filed.  On 12 April 2017 Mr Azir was reminded during a telephone call that his return remained outstanding.  It then took a further three months for the return to actually be filed.

49.  In his notice of appeal to HMRC reference is made to a disability and postal difficulties.  It is not clear to me how these issues are said to have impacted upon the failure to file the return, however, any disability did not prevent Mr Azir engaging in business as part of a partnership and therefore ought not to have prevented him complying with his tax obligations.  It is not suggested that Mr Azir attempted to file his return by post and therefore postal delays cannot have had an impact on the late filing itself.  Should letters have been delayed in reaching Mr Azir, I find it extremely unlikely that the numerous letters sent to his address would have all been delayed by the many months necessary to cause him to miss the filing date.  In addition, he spoke to an HMRC representative in April 2017 and the failure continued for three months after that conversation.

50.  The letter of 31 July 2017 from Glory Rahman suggests that a partner left the partnership during the 2015/16 tax year leaving the remaining partners struggling to collate the relevant records.  No detail of this change is provided, and the issue complained of is not referred to again in subsequent correspondence.  If a partner had left in the relevant tax year, he would have left prior to April 2016 and there would have been over eight months for the remaining partners to have considered the tax ramifications of the departure.  Had the absence of records caused a difficulty with the collating of the return, it was open to the Appellant to communicate that difficulty to the Respondent and seek additional time to file, but no such correspondence was entered into.  The comment in Ms Rahman’s letter implies that the partners were aware of the requirement to file a return, but that they were unable to do so.  That is of course at odds with the assertion that Mr Azir believed he need not file.  

51.  In Perrin v HMRC [2018] UKUT 156, the Upper Tribunal had explained that the experience and knowledge of the particular taxpayer should be taken into account.  The Upper Tribunal had concluded that for an honestly held belief to constitute a reasonable excuse it must also be objectively reasonable for that belief to be held.  The Appellant had become a partner of Mossala One partnership from 15 March 2015.  He registered online on 15 January 2016 and completed an online tax return for the 2014-15 year.  His experience should have prompted the filing of a return by the deadline in the relevant year.

52.  I have also borne in mind the recent comments of the Tribunal in Hesketh v HMRC [2017] UKFTT 871 about whether ignorance of an obligation to file could excuse late filing.  Judge Mosedale held that Parliament intended all of its laws to be complied with, and that ignorance of the law was not an excuse.  I agree with those conclusions and consider that if ignorance of the obligation cannot be a reasonable excuse, then awareness of the obligation but ignorance of the consequences also cannot be a reasonable excuse.

53.  I conclude that Mr Azir does not have a reasonable excuse for the late filing of his return for 2015-16.

54.  Even when a taxpayer is unable to establish that he has a reasonable excuse and he remains liable for one or more penalties, HMRC have the discretion to reduce those penalties if they consider that the circumstances are such that reduction would be appropriate.  In this case HMRC have declined to exercise that discretion.

55.  Paragraph 22 of Schedule 55 provides that I am only able to interfere with HMRC’s decision on special reduction if I consider that their decision was flawed (in the sense understood in a claim for judicial review).  That is a high test and I do not consider that HMRC’s decision in this case (set out in their Statement of Case) is flawed.  Therefore, I have no power to interfere with HMRC’s decision not to reduce the penalties imposed upon the Appellant.

56.  I should add, that even if I did have the power to make my own decision in respect of special reduction, the only special circumstance which Mr Azir relied upon was his belief that he was not required to file a tax return.  I have explained above why I do not consider that failure to ensure his tax obligations were complied with can provide Mr Azir with a reasonable excuse for his late filing.  The circumstances are not such as to make it right for me to reduce the penalty which has been imposed.

CONCLUSION

57.  I therefore confirm the fixed penalties of £100 and £750.

RIGHT TO APPLY FOR PERMISSION TO APPEAL

58.  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.

 

 

ABIGAIL HUDSON

TRIBUNAL JUDGE

 

RELEASE DATE: 09 MARCH 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

APPENDIX

RELEVANT STATUTORY PROVISIONS

          Finance Act 2009

59.  The penalties at issue in this appeal are imposed by Schedule 55.  The starting point is paragraph 3 of Schedule 55 which imposes a fixed £100 penalty if a self-assessment return is submitted late.

60.  Paragraph 4 of Schedule 55 provides for daily penalties to accrue where a return is more than three months late as follows:

4—

(1)  P is liable to a penalty under this paragraph if (and only if) —

(a)  P’s failure continues after the end of the period of 3 months beginning with the penalty date,

(b)  HMRC decide that such a penalty should be payable, and

(c)  HMRC give notice to P specifying the date from which the penalty is payable.

(2)  The penalty under this paragraph is £10 for each day that the failure continues during the period of 90 days beginning with the date specified in the notice given under sub-paragraph (1)(c).

(3)  The date specified in the notice under sub-paragraph (1)(c)—

(a)  may be earlier than the date on which the notice is given, but

(b)  may not be earlier than the end of the period mentioned in sub-paragraph (1)(a).

61.  Paragraph 5 of Schedule 55 provides for further penalties to accrue when a return is more than 6 months late as follows:

5—

(1)  P is liable to a penalty under this paragraph if (and only if) P’s failure continues after the end of the period of 6 months beginning with the penalty date.

(2)  The penalty under this paragraph is the greater of —

(a)  5% of any liability to tax which would have been shown in the return in question, and

(b)  £300.

62.  Paragraph 6 of Schedule 55 provides for further penalties to accrue when a return is more than 12 months late as follows:

6—

(1)  P is liable to a penalty under this paragraph if (and only if) P’s failure continues after the end of the period of 12 months beginning with the penalty date.

(2)  Where, by failing to make the return, P deliberately withholds information which would enable or assist HMRC to assess P’s liability to tax, the penalty under this paragraph is determined in accordance with sub-paragraphs (3) and (4).

(3)  If the withholding of the information is deliberate and concealed, the penalty is the greater of —

(a)  the relevant percentage of any liability to tax which would have been shown in the return in question, and

(b)  £300.

(3A)  For the purposes of sub-paragraph (3)(a), the relevant percentage is—

(a)  for the withholding of category 1 information, 100%,

(b)  for the withholding of category 2 information, 150%, and

(c)  for the withholding of category 3 information, 200%.

(4)  If the withholding of the information is deliberate but not concealed, the penalty is the greater of —

(a)  the relevant percentage of any liability to tax which would have been shown in the return in question, and

(b)  £300.

(4A)  For the purposes of sub-paragraph (4)(a), the relevant percentage is—

(a)  for the withholding of category 1 information, 70%,

(b)  for the withholding of category 2 information, 105%, and

(c)  for the withholding of category 3 information, 140%.

(5)  In any case not falling within sub-paragraph (2), the penalty under this paragraph is the greater of —

(a)  5% of any liability to tax which would have been shown in the return in question, and

(b)  £300.

(6)  Paragraph 6A explains the 3 categories of information.

63.  Paragraph 23 of Schedule 55 contains a defence of “reasonable excuse” as follows:

23—

(1)  Liability to a penalty under any paragraph of this Schedule does not arise in relation to a failure to make a return if P satisfies HMRC or (on appeal) the First-tier Tribunal or Upper Tribunal that there is a reasonable excuse for the failure.

(2)  For the purposes of sub-paragraph (1)—

(a)  an insufficiency of funds is not a reasonable excuse, unless attributable to events outside P's control,

(b)  where P relies on any other person to do anything, that is not a reasonable excuse unless P took reasonable care to avoid the failure, and

(c)  where P had a reasonable excuse for the failure but the excuse has ceased, P is to be treated as having continued to have the excuse if the failure is remedied without unreasonable delay after the excuse ceased.

64.  Paragraph 16 of Schedule 55 gives HMRC power to reduce penalties owing to the presence of “special circumstances” as follows:

16—

(1)  If HMRC think it right because of special circumstances, they may reduce a penalty under any paragraph of this Schedule.

(2)  In sub-paragraph (1) “special circumstances” does not include—

(a)  ability to pay, or

(b)  the fact that a potential loss of revenue from one taxpayer is balanced by a potential over-payment by another.

(3)  In sub-paragraph (1) the reference to reducing a penalty includes a reference to—

(a)  staying a penalty, and

(b)  agreeing a compromise in relation to proceedings for a penalty.

65.  Paragraph 20 of Schedule 55 gives a taxpayer a right of appeal to the Tribunal and paragraph 22 of Schedule 55 sets out the scope of the Tribunal’s jurisdiction on such an appeal.  In particular, the Tribunal has only a limited jurisdiction on the question of “special circumstances” as set out below:

22—

(1)  On an appeal under paragraph 20(1) that is notified to the tribunal, the tribunal may affirm or cancel HMRC's decision.

(2)  On an appeal under paragraph 20(2) that is notified to the tribunal, the tribunal may —

(a)  affirm HMRC’s decision, or

(b)  substitute for HMRC’s decision another decision that HMRC had power to make.

(3)  If the tribunal substitutes its decision for HMRC’s, the tribunal may rely on paragraph 16—

(a)  to the same extent as HMRC (which may mean applying the same percentage reduction as HMRC to a different starting point), or

(b)  to a different extent, but only if the tribunal thinks that HMRC’s decision in respect of the application of paragraph 16 was flawed.

(4)  In sub-paragraph (3)(b) “flawed” means flawed when considered in the light of the principles applicable in proceedings for judicial review.

 

66.  Section 8 - Personal return- provides as follows:

(1)   For the purpose of establishing the amounts in which a person is chargeable to income tax and capital gains tax for a year of assessment, [and the amount payable by him by way of income tax for that year,] he may be required by a notice given to him by an officer of the Board-

a)  to make and deliver to the officer, on or before the day mentioned in subsection (1A) below, a return containing such information as may, reasonably be required in pursuance of the notice, and

b)  to deliver with the return such accounts, statements and documents, relating to information contained in the return, as may reasonably be so required.

(1A) The day referred to in subsection (1) above is-

(a)  the 31st January next following the year of assessment, or

(b)  where the notice under the section is given after the 31st October next following the year, the last [day of the period of three months beginning with the day on which the notice is given]

(1AA) For the purposes of subsection (1) above-

(a) the amounts in which a person is chargeable to income tax and capital gains tax are net amounts, that is to say, amounts which take into account any relief or allowance a claim for which is included in the return; and

(b) the amount payable by a person by way of income tax is the difference between the amount in which he is chargeable to income tax and the aggregate amount of any income tax deducted at source and any tax credits to which [section 397(1) [or [397A(1)] of ITTOIA 2005] applies.]

(1B) In the case of a person who carries on a trade, profession, or business in partnership with one or more other persons, a return under the section shall include each amount which, in any relevant statement, is stated to be equal to his share of any income, [loss, tax, credit] or charge for the period in respect of which the statement is made.

(1C) In subsection (1B) above "relevant statement" means a statement which, as respects the partnership, falls to be made under section 12AB of the Act for a period which includes, or includes any part of, the year of assessment or its basis period.]

(1D) A return under the section for a year of assessment (Year 1) must be delivered-

(a) in the case of a non-electronic return, on or before 31st October in Year 2, and

(b) in the case of an electronic return, on or before 31st January in Year 2.

(1E) But subsection (1D) is subject to the following two exceptions.

(1F) Exception 1 is that if a notice in respect of Year 1 is given after 31st July in Year 2 (but on or before 31st October), a return must be delivered-

(a) during the period of 3 months beginning with the date of the notice (for a non-electronic return), or

(b) on or before 31st January (for an electronic return).

(1G) Exception 2 is that if a notice in respect of Year 1 is given after 31st October in Year 2, a return (whether electronic or not) must be delivered during the period of 3 months beginning with the date of the notice.

(1H) The Commissioners-

(a) shall prescribe what constitutes an electronic return, and

(b) may make different provision for different cases or circumstances.

(2) Every return under the section shall include a declaration by the person making the return to the effect that the return is to the best of his knowledge correct and complete.

(3) A notice under the section may require different information, accounts and statements for different periods or in relation to different descriptions of source of income.

(4) Notices under the section may require different information, accounts and statements in relation to different descriptions of person.

(4A)Subsection (4B) applies if a notice under the section is given to a person within section 8ZA of the Act (certain persons employed etc. by person not resident in United Kingdom who perform their duties for UK clients).

(4B)The notice may require a return of the person's income to include particulars of any general earnings (see section 7(3) of ITEPA 2003) paid to the person.

(5) In the section and sections 8A, 9 and 12AA of the Act, any reference to income tax deducted at source is a reference to income tax deducted or treated as deducted from any income or treated as paid on any income.