[2012] UKFTT 528 (TC)
TC02204
Appeal number: TC/2011/09737
INCOME TAX –late filing of
the self-assessment tax return – penalties under sections 93(2) and (4) Taxes
Management Act 1970 – whether reasonable excuse
FIRST-TIER TRIBUNAL
TAX CHAMBER
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BRYAN CHARLES
HOWARD
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Appellant
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- and -
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THE
COMMISSIONERS FOR HER MAJESTY’S
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Respondents
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REVENUE &
CUSTOMS
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TRIBUNAL:
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JUDGE GUY BRANNAN
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The Tribunal determined the
appeal on 14 August 2012 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 25 October 2011 (with
enclosures), HMRC’s Statement of Case submitted on 12 March 2012(with
enclosures) and the Appellant’s Reply dated 2 April 2012.
© CROWN COPYRIGHT
2012
DECISION
1.
This is an appeal against two £100 penalties imposed under sections
93(2) and (4) Taxes Management Act 1970 ("TMA") respectively for the
alleged late filing of a self-assessment tax return for the tax year ended 5
April 2010.
The facts
2.
The appellant is a retired civil servant.
3.
HMRC's records show that on 4 June 2010 HMRC issued to the appellant a
Notice to File. The Notice to File was issued because the appellant was in receipt
of age-related allowances. The appellant states that he did not receive this
document.
4.
By way of explanation, section 8 (1) TMA provides that an officer of the
Board may, by notice, require a taxpayer to make and deliver a tax return
containing such information as may reasonably be required in pursuance of the
notice. A Notice to File, is a notice sent to the taxpayer pursuant to this
provision. It is part of the general system of self-assessment under which the
primary responsibility for assessing and returning a taxpayer's tax liabilities
falls on the taxpayer.
5.
The filing date for the tax return required by the Notice to File was
either 31 October 2010 (in respect of a paper return) or 31 January 2011 (in
respect of an online return): section 8(1D) TMA.
6.
The Notice to File is not itself a tax return but notifies the taxpayer
that he/she must file either a paper or online return by the relevant deadline,
failing which the taxpayer will be liable to an automatic late-filing penalty
of £100. The specimen Notice to File for the tax year ended 5 April 2010, with
which I was provided, states as follows:
"We are sending you this notice rather than a
paper tax return, but if you would like a paper tax return, please phone us on
0845 900 0404."
7.
After discussing the deadlines for filing paper and online returns, the
Notice to File sets out guidance in respect of filing online returns.
8.
On 15 February 2011, HMRC, having not received a tax return for the year
ended 5 April 2010, issued a first penalty notice to the appellant in the
amount of £100 pursuant to section 93(2) TMA.
9.
Section 93 (2) TMA provides that where a taxpayer has been required by
a notice served under section 8 TMA to deliver a return and he fails to comply
with the notice he shall be liable to a penalty of £100. Subsection (4)
provides that if the taxpayer’s failure to comply with the notice continues
after a period of six months beginning with the filing date, the taxpayer is
liable to a further penalty of £100.
10.
On 26 February 2011, the appellant appealed against the imposition of
the first late filing penalty. In his Notice of Appeal in respect of the first
penalty notice, the appellant gave as his reason for the appeal:
"Form supplied was for Internet return – I have
not got a computer!"
11.
As I have noted in paragraph 6 above, the Notice to File gave a
telephone number if the appellant preferred to file a paper return. It was not
solely a document in respect of online returns.
12.
Moreover, the appellant's reply suggests that he had, in fact, received
the Notice to File. I find that it is more probable than not that HMRC did send
this document as recorded in their electronic records and that the appellant
received it.
13.
HMRC issued a penalty appeal decision letter on 23 March 2011 and
offered a review of the penalty. On 4 April 2011 the appellant requested a
review. The appellant enclosed a copy of his coding notice for 2011/2012. He
stated that:
"Your Form 2010 is also enclosed as I still do
not know the amount of pension increase this year!
I feel I am owed an explanation of this continued
chasing of me to fill in what seems irrelevant forms."
14.
It is not clear what was meant by the appellant's reference to
"Form 2010". HMRC suggested that this might be a reference to the
Notice to File or to the tax return in respect of the year ended 5 April 2010.
In their Statement of Case HMRC stated that they did not retain a copy of the
appellant's enclosure, but, as we shall see, it seems that the return in
respect of 5 April 2010 was sent back to the appellant at the conclusion of
HMRC’s review.
15.
HMRC concluded its review on 15 June 2011 and their letter upheld their
original penalty decision. The letter explained that the appellant had been
asked to file a return because he was subject to a reduction in age related
allowances. The letter specifically stated that the writer was returning the
appellant's 09/10 return for completion and asked to complete it and send it to
HMRC's office in Cardiff. It also directed him to a telephone number in case he
needed advice.
16.
On 20 June 2011 the appellant acknowledged receipt of HMRC's letter of
15 June. The appellant enclosed a cheque for £100, which I assume was in
respect of the penalty charge. The appellant indicated his intention to appeal
to this tribunal.
17.
On 1 August 2011, the appellant telephoned HMRC. During that call he was
advised that, although his return for the year ended 5 April 2011 had been
received, his return for the year ended 5 April 2010 remained outstanding. A
duplicate tax return was ordered for the appellant, even though a paper return
for that year had already been returned to the appellant under cover of HMRC's
letter of 15 June 2011.
18.
A second penalty notice, pursuant to section 93(4) TMA, was issued to
the appellant on 2 August 2011.
19.
The appellant appealed the second penalty on 15 August 2011. The notice
of appeal stated that the tax return had been delayed in the post and further
stated: "Awaiting tax form ordered 2 weeks ago." In his reasons in
support, the appellant stated:
"Halifax Bank failed to deduct tax 2010/2011 –
item now settled. However, tax year 2009/10 now being investigated. I now have
evidence that tax was deducted in 2009/10."
20.
It is hard to reconcile the Appellant's assertion that he was awaiting a
tax form which he had ordered two weeks before (presumably a reference to the
return that was ordered in the telephone conversation of 1 August 2011), with a
clear statement in HMRC's letter of 15 June 2011 that his return for the year
ended 5 April 2010 was being enclosed in that letter. In any event, in my view,
the appellant should have obtained and completed his tax return for that year
at an earlier date e.g. when he received the first penalty notice. There seems
no reason why he should leave it until August.
21.
HMRC issued another appeal decision letter on 30 August 2011, offering a
review. On 12 September 2011, the appellant requested an HMRC review of their
decision. In that request, the appellant stated that the original HMRC request
for a tax return for the year ended 5 April 2010 was not received. As I have
found above, in my view, the taxpayer did receive a Notice to File in June
2010. The appellant stated that he was in the process of completing his tax
return having recently received it. He pointed out that this was the first time
he had been asked to complete a tax return.
22.
HMRC concluded its review and notified the outcome to the appellant in a
letter dated 13 October 2011. The review letter incorrectly stated that the
Notice to File was received on 6 April 2010; in fact, the Notice to File was issued
on 4 June 2010.
23.
The appellant completed a Notice of Appeal on 25 October 2011 and
thereby appealed to this tribunal. The appellant stated:
"1. It is claimed that a self-assessment
form was sent in [sic] 31Oct 2010. This was not received by me.
2. I have been retired since November 1989 and have
not been asked for a tax return until Jan 2011 (within a few days of the end of
the month).
3. I have had my appeal upheld for a late return for
2010/2011 [the appellant refers to cheque details].
4. If the 2010/2011 late return has been found in my
favour I suggest that the 2009/2010 appeal should also be allowed."
24.
As I have already found, a Notice to File was sent to the appellant in
June 2010. There is nothing in the papers to indicate that anything was sent to
the appellant in October 2010. In addition, there is nothing in the papers
before me to indicate that the appellant appealed in respect of the tax year
ended 5 April 2011. The only appeals that the appellant appears to have made
are appeals against the first and second penalty determinations as noted above.
Finally, whether the appellant's bank failed to deduct tax is a question that
has no relevance to the requirement that the appellant file a tax return for
the year ended 5 April 2010.
25.
In his reply to HMRC's Statement of Case the appellant stated:
"My defence for failing to file a tax return in
2009 [sic] is that since I retired in 1989 the Cardiff office [of HMRC] are
aware of my income from civil service pensions, and all other incomes are taxed
at source thus avoiding the need for tax returns.
In July 2008 I moved my ISA, took out a PEP and a
"saver" account with the Halifax Bank. At no time was I advised to
file a tax return by the Halifax and in 2009 the "saver" account was
paid net so there was no outstanding tax deficit.
I maintain that a tax return for 2009 was
unnecessary bureaucracy and the £100 fund should not be imposed.
For 2010 tax year I did not receive a form for
completion until January 2011, after a period of more than 32 years of not requiring
return. I think that a £100 fine was harsh.
At that stage I was unaware that the Halifax "saver" account had been paid gross. This outstanding tax has now been
paid with a cheque for £491.43. I have now moved all Halifax monies to
HSBC."
26.
There seems to be some confusion in the appellant's mind between the tax
years ended 5 April 2009 and 5 April 2010.
27.
The appellant filed his paper return for the year ended 5 April 2010
with HMRC on 15 September 2011.
Decision
28.
In my view, as I have indicated, the appellant did receive a Notice to
File in June 2010. He was, therefore, under an obligation to file a paper
return by 31 October 2010 or an online return by 31 January 2011. He failed to
do so. He did not file his return for the tax year ended 5 April 2010 until 15
September 2011.
29.
It is a taxpayer's responsibility to file his tax returns on time. When
a Notice to File is served it should be complied with. In my view, the
appellant failed to observe his tax filing obligations. It may well be that he
was under the impression that his investments were paid under the deduction of
tax, but once a Notice to File has been served the appellant was under an
obligation to file his tax return by the relevant dates (applicable in respect
of paper and online returns) unless he had a reasonable excuse for failing to
do so (section 93 (8) TMA).
30.
There is nothing in the papers before me which indicates that the
appellant had a reasonable excuse for failing to file his tax return for the
year ended 5 April 2010. The errors made by Halifax Bank, cited by the
appellant, are not, in my view, relevant to his obligation to file a return
requested under section 8 TMA. Indeed, even though the appellant was informed
about the nature of the Notice to File in HMRC's letter of 15 June 2011 he did
not file his tax return for the year ended 5 April 2010 until 14 September
2011.
31.
In my view, therefore, the two £100 penalties were correctly charged
pursuant to section 93(2) and (4) TMA respectively. It follows, therefore, that
the appeals against these penalties must be dismissed.
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.
GUY BRANNAN
TRIBUNAL JUDGE
RELEASE DATE: 21 August 2012
