[2011] UKFTT 254 (TC)

TC01118
Appeal numberTC/20104

Application to make a late appeal against jeopardy amendments made by HMRC to Appellant’s self assessments- whether earlier appeal valid application granted

FIRST-TIER TRIBUNAL

TAX 

	GREENOAKS PHARMACY LTD	Appellant

	- and -

	THE COMMISSIONERS FOR HER MAJESTY’S
	REVENUE AND CUSTOMS	Respondents

				TRIBUNAL: S.M.G.RADFORD (TRIBUNAL JUDGE)
						S.CHEESMAN

Sitting in public at Holborn Bars, London EC1N 2NQ on 4 March 2011

Mr K Gordon for the Appellant

Mr D Griffin for the Respondents

© CROWN COPYRIGHT 2011

DECISION

1.	This is an application to make a late appeal against the jeopardy amendments made by HMRC to the Appellant’s self assessments for the accounting periods ended 30 September 2006 and 30 September 2007.
2.	In considering whether to allow the late appeal the Tribunal is required to consider the merits of the appeal in the interests of fairness and justice.
3.	Messrs Patel, director of the Appellant company, Wadhani of Cameron & Associates, the Appellant’s accountants, and Shah, the Appellant’s tax adviser gave evidence for the Appellant.
Background and facts
4.	The Appellant operates a chain of retail pharmacies. As is typical with retail pharmacies it is considered for VAT purposes to be a “repayment trader” as VAT is charged by its suppliers but many of its sales are zero-rated. It fell seriously behind in its tax compliance obligations and HMRC withheld the VAT repayments pending the Appellant’s tax affairs being brought up to date.
5.	In November 2008 HMRC issued determinations under paragraph 36 of Schedule 18 of Finance Act 1998 (“Schedule18”) for the two accounting periods in the absence of any returns for the period.
6.	In late 2008 the Appellant appointed Cameron & Associates to take over the provision of accountancy and tax services to the Appellant from the Appellant’s former advisers and at the beginning of December 2008 they filed draft accounts to displace the determinations. Mr Gray of HMRC was aware that they were just draft accounts.
7.	At the end of June 2009 the final corporation tax returns and accounts were submitted. Mr Wadhani confirmed that these accounts and the computations were accurate. Additionally the June 2009 accounts were audited. He confirmed that the draft accounts were just estimates because at that stage they had only analysed the primary books but did not have the opening positions from the previous accounts.
8.	On 3 July 2009 Mr Griffin of HMRC wrote to Mr Patel to commence an investigation into his tax affairs and business interests and between 8 and 13 July 2009 there were various telephone conversations between Mr Griffin and Mr Wadhani. 
9.	Based on the draft accounts Mr Griffin issued jeopardy assessments on 23 July 2009 which increased the Appellant’s tax liability by £1,090,724.58. The director of the Appellant and his accountant took the view that the jeopardy amendments were wrong in their entirety as the correct accounts and computations were those as submitted in June 2009.
10.	On 21 August 2009 the Appellant’s representative faxed HMRC stating:
	“I have also received the amended tax assessments as you have advised and I must say that you have significantly over estimated. Accordingly I will be sending appeal and postponement applications to those amendments in due course.”
11.	The Appellant then started to receive its VAT repayments and so the accountant assumed that the appeals and postponement applications in his 21 August fax had been accepted.
12.	However after being contacted by the local HMRC debt management office threatening winding up action if the jeopardy amendments were not paid the accountant faxed the debt management office appealing the assessments and requesting postponement of the tax.
13.	Mr Griffin moved offices between July 2009 and January 2010 and so was difficult to contact and in January 2010 further enforcement action made the Appellant realise that its appeals had still not been effected. A further fax was sent to Mr Griffin on 13 January 2010 and on 18 January 2010 Mr Griffin refused the late appeals stating that he failed to see what reasonable excuse there might be.
The Legislation
14.	Paragraph 30 of Schedule 18 states:
 	(3) An appeal may be brought against an amendment of a company’s self assessment by an officer of Revenue and Customs under this paragraph.
	(4) Notices of appeal must be given-
	(a) in writing,
	(b) within 30 days after the amendment was notified to the company,
	(c) to the officer of the Board by whom the notice of amendment was given.
15.	Paragraph 92 of Schedule 18 states :
(1)	This paragraph applies in relation to any appeal under this Schedule
(2)	The notice of appeal shall specify the grounds of appeal.
Appellant’s Submissions
16.	Mr Gordon submitted for the Appellant that notwithstanding the second sentence of the accountant’s fax of 21 August 2009 this communication was sufficient to amount to a valid appeal in accordance with paragraphs 30(3) and 30(4) and 92 of Schedule 18.
17.	Mr Gordon submitted that the Appellant’s accountant had believed that the appeal had been accepted until the Appellant was contacted by HMRC debt management.
18.	Mr Gordon submitted that the accountant acted promptly as soon as it became apparent that the appeals had not been processed. In particular the notice of appeal was sent as soon as Mr Griffin’s new fax number was received.
HMRC’s Submissions
19.	Mr Griffin submitted that he did not consider that the earlier notice of an intent to appeal was a reasonable excuse for not sending in a formal appeal within 30 days of the jeopardy assessments being made by him.
Findings
20.	The Tribunal found that the fax of 21 August 2009 was sufficient to amount to a valid appeal against the amendments made.
21.	The Tribunal found that the Appellant had made several honest attempts to communicate its wish to appeal to HMRC and should not suffer as a result of the confusion between the various HMRC’s offices.
Decision
22.	The Tribunal found merit in the Appellant’s arguments and therefore decided that it was in the interests of fairness and justice for the Appellant to be allowed to make a late appeal.
23.	The application to make a late appeal against the jeopardy amendments is hereby granted and the tax postponed until this appeal is heard.
24.	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.

TRIBUNAL JUDGE
RELEASE DATE: 15 APRIL 2011

Amended pursuant to rule 37 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 on 31 May 2011.