[2010] UKFTT 316

TC00603

Appeal number: TC2009/16834

Failure to pay tax – surcharge imposed – whether Reasonable Excuse

FIRST-TIER TRIBUNAL

TAX 

	NEIL CLARKE	Appellant

	- and -

	THE COMMISSIONERS FOR HER MAJESTY’S
	REVENUE AND CUSTOMS (Income Tax)	Respondents

TRIBUNAL: WDF Coverdale (Judge)
	            Mr JE Davison (Member)			

The Tribunal determined the appeal on 3rd March 2010 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 28th November 2009,  HMRC’s Statement of Case submitted on 21st January 2010 and the Appellant’s Reply dated 5th February 2010.

© CROWN COPYRIGHT 2010

DECISION

1.	On 18.05.09 HMRC made an assessment of Income Tax due from the Appellant for the year ended 05.04.07 in the sum of £5,881.98. This tax was due to be paid on or before 18.06.09.

2.	In the absence of payment HMRC issued a surcharge notice on 13.08.09 in the amount of £294.09.
3.	By letter dated 14.09.09 the Appellant appealed against the surcharge, saying that he had sold a business, spent all the proceeds of sale and “had no money left to pay the unexpected tax bill”.

4.	HMRC conducted a review; the original surcharge decision was upheld; the Appellant has further appealed and the matter comes before the Tribunal today as a paper appeal in the absence of the parties.

5.	In his letter of appeal to the Tribunals Service the Appellant repeats the substance of his letter of appeal dated 14.09.09: he refers to the sale of a business and suggests that lack of immediate funds should be taken into consideration; he seeks to blame his accountants and mentions his own ignorance; he says he will pay his tax bill at some time in the future.

6.	Payment of the Appellant’s tax was due in accordance with S59B Taxes Management Act 1970. A taxpayer becomes liable to a surcharge where they are late in paying the tax due and the surcharge is calculated at 5% of all tax remaining unpaid after the expiry of 28 days from the due date.

7.	The period of default in this case is the period from the due date until the tax is paid. The due date was 18.06.09; the tax had still not been paid at the date of preparation of the Submission papers for this appeal (and there is no evidence before the Tribunal that it has been paid at all) so the period of default has been taken as 18.06.10 to 20.01.10 i.e. 215 days.

8.	The Tribunal may only set aside a surcharge where the taxpayer had a reasonable excuse for not paying the tax throughout the period of default, in accordance with S59C(9).

9.	It is noted that the Appellant has been making self-assessment returns since 1996-7 and is therefore considered to be experienced with the self-assessment system. 

10.	In so far as the appellant states that he was not expecting the tax amendment that gave rise to the assessment in question it is noted that the assessment arose because of an amendment that he (or his representative) sent to HMRC on 13.03.09.

11.	Reliance upon his accountant in complying with the tax regime does not assist the appellant who has ultimate responsibility to ensure that his personal tax return is completed correctly.

12.	S59C(10)Taxes Management Act 1970 provides that inability to pay is specifically excluded as a reasonable excuse for the purposes of  S59C(9).

13.	The Tribunal concludes that no reasonable excuse existed throughout the period of default; the decision dated 30.10.09 upholding the original decision to impose the surcharge was properly made; this appeal is dismissed.

14.	The Appellant has a right to apply for permission to appeal against this decision pursuant to Rule 39 of the Tribunal Procedure (First-Tier Tribunal) (Tax Chamber) Rules 2009. 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.

TRIBUNAL JUDGE
					
RELEASE DATE: 8 July 2010