[2010] UKFTT 640 (TC)

TC00879

INCOME TAX – CIS Penalty – failure to comply – no reasonable excuse shown on facts- appeal dismissed
	Appeal number: TC/2010/01742

FIRST-TIER TRIBUNAL
   TAX 

	TIMAR (ROAD PLANNING) LIMITED	Appellant

	- and -

	THE COMMISSIONERS FOR HER MAJESTY’S
	REVENUE AND CUSTOMS	Respondents

TRIBUNAL: ADRIAN SHIPWRIGHT  	(TRIBUNAL JUDGE)
		JULIAN SIMS		(TRIBUNAL MEMBER)

The Tribunal determined the appeal on 11 June 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 December 2009,  HMRC’s Statement of Case submitted on 26 March 2010and all the other documentation provided.

A full decision was requested in time by the Appellant. This is the full decision

© CROWN COPYRIGHT 2010

DECISION

1.	This is an appeal by Timar (Road Planning) Ltd (“the Appellant”) against the penalties imposed for the late submission of monthly Construction Industry Scheme Returns for the months ending 5 December 2007 to 5 March 2008 (inclusive)  making a total of 52 returns. Section 98 Taxes Management Act 1970 imposes penalties for late filing of such returns. 
2.	The total amount of the penalties is £7,800. The Appellant was notified of the penalties by letter. The Appellant sought review of the imposition of the penalties. The imposition of these penalties was upheld on review. This was notified by letter dated 17 November 2009.
3.	The Appellant carries on business within The Construction Industry Scheme (road planning) and has been registered for the scheme since April 2007. 
4.	The Appellant has been paying subcontractors in accordance with the scheme since registration. Accordingly, the Appellant was well aware of its duties and responsibilities under that legislation.
5.	The period etc for the penalties as determined by HMRC were as follows:

Month ended	Due Date	Received
Date	Days late	
5 December 2007	19 January 2008	22 May 2009	534	
5 January 2008	19 February 2008	22 May 2009	489	
5 February 2008	19 March 2008	22 May 2009	458	
5 March 2008	19April 2008	22 May 2009	429	

6.	HMRC records show and we find as primary fact that:
(1)	no returns (either photocopies or originals) for the period ending 5 December 2007 to 5 March 2008 were received by HMRC before 22 May 2009;
(2)	returns for the period starting with the period ending 5 May 2007 to date have been issued to the Appellant at the Appellant's proper address in a timely fashion. There was no evidence to contradict this. In particular there was no evidence of posting produced by the Appellant and we remind ourselves that the onus of proof is on the Appellant. The Appellant had not discharged this burden.

7.	 The legislation requires the CIMS return to be received by the 19th of the month following the return period ended (e.g. by 19 April for period ending 5 April).
8.	Regulation 4(1) Income Tax (Construction Industry Scheme) Regulations 2005 SI number 2045 provides:
“(1)	A return must be made to the Commissioners for Her Majesty's Revenue and Customs in a document or format provided or approved by the Commissioners—
(a)	not later than 14 days after the end of every tax month, by a contractor making contract payments or payments which would be contract payments but for section 60(4) of the Act (contract payments: exceptions), and
(b)	not later than 14 days after the end of the tax month following the appointed day, by a contractor who has made a payment in the 12 months preceding the appointed day which would be a contract payment or a payment which would be a contract payment but for section 60(4) of the Act if made after the appointed day”. [emphasis added].
9.	HMRC say in the guidance booklets "do not send a photocopied return” (paragraph 4.7 CIS340 Construction Industry Scheme booklet published by HMRC available on the internet and sent to registered users). 
10.	Consequently, the legal requirement for paper compliance is for returns in a document provided or approved by HMRC to be made. HMRC has not been shown to approve photocopies. On the contrary HMRC has publicly stated do not send photocopies.
11.	Accordingly, the Appellant failed to show it made returns in a form provided or approved by HMRC. We find as a matter of primary fact that returns in a document provided or approved by HMRC were not received by HMRC by the due date...
12.	We confirm for the sake of clarity find that even if photocopies had been received by HMRC in time this would not have met the Appellant’s legal obligations to make proper returns on time. We find sending photocopies does not fulfil the requirement even if they had been shown to have been received in time. 
13.	Further sending such copies does not amount to a reasonable excuse within the statutory requirements.
14.	The Appellant contended:
(1)	It had never received the original returns;
(2)	Photocopies were filed on time.
15.	HMRC, in essence, contended that the returns were submitted late and there was no reasonable excuse shown in the circumstances.
16.	The Tribunal considered whether the Appellant had a reasonable excuse in relation to all or any of the late filings.
17.	 In particular, we carefully considered what the Appellant had to say about submitting photocopies. Even if had been shown that photocopies had been received by HMRC, which it was not, that would not have met the requirement to file the return in question on time in a document provided or approved by HMRC. The Appellant has not shown anything exceptional or out of its control. It could have sought proper forms particularly if it had a proper system to deal with its CIS obligations properly and in a timely manner. The Appellant has not shown that it did. In the circumstances it would be very hard for it to do so.
18.	The Tribunal confirmed the calculation of the penalties as set out in the relevant part of Folio 1.
19.	We have found in the circumstances and on the evidence before us the returns were not filed on time and no reasonable excuse had been shown by the Appellant for its failure to comply with its legal obligations giving particular consideration to what the Appellant said about photocopies. We further find that HMRC has properly, proportionately and reasonably in this case.
20.	Accordingly, on the basis of the facts we have found we dismiss the appeal.
21.	We record that as this is a decision on the facts we would not be minded to give permission to appeal if asked.

20.	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.

                             

ADRIAN SHIPWRIGHT

TRIBUNAL JUDGE
RELEASE DATE: 13 DECEMBER 2010