[2010] UKFTT 558 (TC)

TC00/809

Appeal number: TC/2010/06127

INCOME TAX –PENALTY FOR LATE FILING OF RETURN – Whether Appellant had reasonable excuse for default – No – Appeal dismissed.  

FIRST-TIER TRIBUNAL

TAX 

	GREGORY KNOWLES	Appellant

	- and 

	THE COMMISSIONERS FOR HER MAJESTY’S
	REVENUE AND CUSTOMS	Respondents

		TRIBUNAL: 	MICHAEL TILDESLEY OBE (TRIBUNAL JUDGE)

The Tribunal determined the appeal on 27 October 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 22 July 2010 and HMRC’s Statement of Case submitted on 25 August 2010 and the Appellant’s Reply dated 27 September 2010 .

© CROWN COPYRIGHT 2010

DECISION

1.	The Appellant appealed against a penalty in the sum of ₤100 dated 16 February 2010 for the late filing of a paper self assessment return for the year ended 5 April 2009.
2.	The Appellant contended that he had a reasonable excuse for not filing the tax return on time. The Appellant stated that the HMRC Officer who took his payment for the tax due advised him that he would be penalised only if his paper self assessment return did not arrive by the end of January 2010. In view of the advice given the Appellant decided not to attempt to file the return online.  The Appellant also complained about the conduct of the Officers who dealt with his subsequent requests to quash the penalty.
3.	The Tribunal makes the following findings of fact:
(1)	On 6 April 2009 HMRC issued the Appellant with a tax return for the year ended 5 April 2009.
(2)	The front page of the tax return contained a notice requiring the Appellant by law to make a return of his taxable income and capital gains for the year ended 5 April 2009. The notice specified the deadlines for the return which were the 31 October 2009 for a paper return and 31 January 2010 for an online return. The notice also warned the Appellant that a penalty of ₤100 would be charged if the tax return was received after the appropriate deadline. 
(3)	The Appellant filed a paper return on 27 January 2010. The deadline for filing a paper return was 31 October 2009. The Appellant did not file the tax return online.
(4)	HMRC recorded a telephone call on the 29 January 2010 at 12:10 with the Appellant who was making a payment on account in respect of the tax due. According to HMRC, the Appellant was advised during the telephone call  that he may receive a penalty because his paper return was filed late. The Appellant disputed the accuracy of HMRC’s record of the conversation.  The Appellant implied that the record was a print-out summarising the conversation rather than a recording of the actual conversation.  The Appellant stated that the HMRC Officer who took his payment told him that he would only be penalised if the paper return was not received by the end of January.
(5)	There was no evidence of any other phone conversation between the Appellant and HMRC during January 2010. The Tribunal finds that the Appellant was relying on the contents of the 29 January 2010 conversation as his reasonable excuse for not filing his tax return on time.     
(6)	The Appellant’s complaint about how HMRC Officers handled his case following the imposition of the penalty was not relevant to these proceedings which were concerned solely in law with why he did not file his return on time. If the Appellant is aggrieved with his subsequent treatment by HMRC Officers, he should consider invoking HMRC complaints procedure which is the correct mechanism for resolving such matters.   
4.	The Tribunal has limited jurisdiction in penalty Appeals. It has no power to mitigate the penalty. The Tribunal can either confirm the penalty or quash it if satisfied the Appellant has a reasonable excuse for his default. The Appellant can avoid the penalty if he satisfies the Tribunal on a balance of probabilities that he has a reasonable excuse for not filing the return by the due date. If the Appellant cannot establish a reasonable excuse, the legislation takes no account of the difference between a taxpayer who has made a genuine effort to comply albeit without success and a taxpayer who has made very little effort. Either the taxpayer is on time or he is not; either he exercises due diligence or he does not. No account is taken of the degree of culpability.
5.	In considering a reasonable excuse the Tribunal examines the actions of the Appellant from the perspective of a prudent tax payer exercising reasonable foresight and due diligence and giving proper regard to his responsibilities under the Tax Acts.
6.	The Appellant was on notice that he was required to file a paper return by the 31 October 2009. A prudent tax paper would have read the legal notice on the tax return and been aware of his obligations to file the return by a specified date. The Appellant filed his paper return on 27 January 2010 almost three months after the requisite deadline. The Appellant’s reason for not filing the return by the 31 October 2009 was that on the 29 January 2010 he was given wrong advice by the Officer taking the payment on account. Leaving aside for a moment the dispute about what the Officer said, the purported wrong advice could not be an excuse for the late filing of the  paper return because the return had already been filed late before the advice was given. An excuse to be a reasonable excuse must exist at the point of default which in the case of a paper return was on the 31 October 2009. The Appellant has given no explanation for why he failed to submit the paper return by the required date.
7.	The Appellant’s case, therefore, was that I have no excuse for missing the deadline for the paper return but I could have put matters right if I had not been deflected from filing the return online by the wrong advice. In that case the Tribunal concludes that the Appellant was not aware of the problem with his return until he contacted HMRC to make payment and that it was the Officer who brought it to his attention. That being so the Tribunal is satisfied that on the 29 January 2010 a HMRC Officer advised the Appellant that he might receive a penalty for the late filing of his tax return. The Tribunal does not accept the Appellant’s version of the conversation with the Officer. 
8.	The issue that remains before the Tribunal is whether the Appellant had a reasonable excuse for not filing his 2008/09 return online by 31 January 2010. The Tribunal makes the following findings of fact:
(1)	 Around April 2009 HMRC informed the Appellant by notice of the deadlines by which a tax return for 2008/09 should be filed: 31 October 2009 for a paper return and 31 January 2010 for an online return.
(2)	The Appellant filed his paper tax return for 2008/09 late by almost three months for which he offered no explanation. 
(3)	The Appellant’s failure to observe the deadline for the filing of the paper tax return without explanation confirmed his lack of knowledge of the deadlines for the various types of tax return despite the clear guidance set out in the return.  The Tribunal is, therefore, satisfied that the Appellant did not deal with the guidance in the manner expected of a tax payer exercising due diligence and giving proper regard to his responsibilities under the Taxes Act.
(4)	On 29 January 2010 the Appellant was made aware of the problem regarding the filing of his return by the HMRC Officer taking his payment. The Officer also warned him of the possibility of a penalty for the late filing of the paper return.
(5)	The Appellant chose not to file the return on-line believing that he would not be penalised for the late filing of the paper return despite the advice to the contrary. 
(6)	The Appellant’s actions were not those of a prudent tax payer exercising reasonable foresight and due diligence and giving proper regard to his responsibilities under the Tax Acts.
9.	The Tribunal holds that the Appellant did not have a reasonable excuse for the late filing of the tax return for the year ended 5 April 2009. The Tribunal dismisses the Appeal and confirms the penalty of ₤100.
10.	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.

MICHAEL TILDESLEY OBE
TRIBUNAL JUDGE
RELEASE DATE: 8 November 2010