[2011] UKFTT 287 (TC)
TC01149
Appeal number: TC/2011/00720
Appeal
against Employer’s penalty for late return – reasonable excuse – appeal
dismissed
FIRST-TIER TRIBUNAL
TAX
MARTIN
CLEVELAND
T/A
MARTIN CLEVELAND PHOTOGRAPHY Appellant
-
and -
THE
COMMISSIONERS FOR HER MAJESTY’S
REVENUE
AND CUSTOMS Respondents
TRIBUNAL:
J. Blewitt (TRIBUNAL JUDGE)
The Tribunal determined the
appeal on 18 April 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 23 January 2011 and HMRC’s
Statement of Case submitted on 14 February 2011.
© CROWN COPYRIGHT
2011
DECISION
1. By
Notice of Appeal dated 23 January 2011 the Appellant appeals against an
employer’s penalty in the sum of £400 imposed as a result of the late
submission of a P35 return for the period 2009/2010.
2. The
imposition of such a penalty is set down by statute; section 98A (2) (a) Taxes
Management Act 1970 applies in this case which provides that a penalty of £100
can be imposed for each 50 employees for every month (or part thereof) that the
return remained outstanding.
3. The
filing date in this case was 19 May 2010. The return was submitted online on 24
January 2011.
4. On
27 September 2010 a penalty notice in the sum of £400 was issued to the
Appellant which was calculated from 20 May 2010 to 19 September 2010.
5. By
letter dated 15 October 2010, Mrs Cleveland, on behalf of the Appellant, appealed
to HMRC against the penalty of £400. The letter stated:
(1)
The relevant paperwork was sent to HMRC; Mrs Cleveland queried why it
took HMRC 4 months to notify the Appellant that HMRC did not receive the
paperwork;
(2)
The Appellant runs a small company which tries to complete its own
paperwork which is difficult when no one is helpful and advice is needed;
(3)
Mrs Cleveland questioned why the Appellant was not sent the missing
paperwork as all the forms required for the End of Year Return were requested
and sent to HMRC.
6. HMRC
responded by letter dated 15 November 2010 stating that the P35 should have
been submitted online by 19 May 2010 and at the time of writing remained
outstanding.
7. The
Appellant formally requested a review of HMRC’s decision to impose penalties on
26 November 2010. The request enclosed a copy of the original return which had
been sent to HMRC on 3 April 2010.
8. By
letter dated 5 January 2011, HMRC informed the Appellant that following review
the penalties would be upheld. The reasons given were that when the documents
were submitted on 3 April 2010, a P35 was not completed or submitted. Instead
the Appellant sent a P14 and P38A. As a result, the return was rejected as
incomplete. The Appellant was advised of this failure on 26 May 2010 and at the
time of the review on 5 January 2011, the completed 2009/2010 P35 had not been
received. The copies enclosed within the request for a review were not, in
HMRC’s view correct as the tax and national insurance on the P14 does not match
those on the P35 and a P35 and P14 must be submitted where the figures agree.
Mr McGarry, the reviewing officer explained that penalties are not issued until
approximately September following the due date as the checks required as to
which returns remain outstanding take some time to complete.
9. On
23 January 2011 the Appellant appealed to the Tribunal. The grounds of appeal
relied upon can be summarised as follows:
(1)
That the P35/P14 was submitted on 19 May 2010 by post;
(2)
The Appellant was not notified until September 2010 that there was a
problem with the P35 and a fine of £400 imposed;
(3)
The Appellant has been in business for 20 years and never missed a
payment to HMRC; help rather than a fine would be expected.
10. The obligation
to make End of Year Returns prior to the deadline of 20 May following the end
of a tax year is set down by statute by virtue of Regulation 73 of the Income
Tax (PAYE) Regulations 2003 and paragraph 22 of Schedule 4 of the Social
Security (Contributions) Regulations 2001.
11. The penalties
imposed as a result of failure to meet tax obligations are provided for by
statute and this Tribunal has no discretion to mitigate those penalties unless
it is considered that there is a reasonable excuse lasting throughout the
duration of the default period, in which case the penalties can be set aside.
12. It is a well
established principle of case law that the responsibility remains on the employer
to ensure that all obligations are met and ignorance cannot amount to a
reasonable excuse for failing to comply with such obligations.
13. The Appellant
contends that he was not notified until September 2010 that there was a problem
with the P35 and a fine of £400 imposed. There is no obligation upon HMRC to
issue reminders to taxpayers or notify taxpayers that a P35 has not been
received prior to the issue of penalty notices. There is also no statutory
obligation upon HMRC to issue penalty notices closer to the deadline date. It
is well publicised on HMRC’s website that penalties can be imposed for the late
submission of returns and that a reminder will not necessarily be sent. I do
not find that the lack of notification until September 2010 amounts to a
reasonable excuse.
14. The Appellant
contends that the P35/P14 was submitted on 19 May 2010 by post. HMRC rejected
the documents submitted on 19 May 2010 on the basis that a P35 was not
included. When the Appellant sent copies on 26 November 2010 of the documents
previously submitted to HMRC the forms were rejected as incorrect due to the
fact that the tax and national insurance on the form P14 did not match the
details on the P35. Therefore, even if the Appellant had sent all relevant
forms on 19 May 2010, the end of year return would have been rejected as
incorrect. I do not therefore find that the Appellant has a reasonable excuse
for the late submission of the return.
15. Even if I had
accepted that the Appellant did have a reasonable excuse, the law is clear that
this must last throughout the period of default. Given that the Appellant did
not file the return until 24 January 2011 I do not accept that there was a
reasonable excuse lasting throughout the period of default as no explanation
has been given for the delay once the Appellant became aware that the return
was outstanding.
16. I accept that the
Appellant has been in business for 20 years and never missed a payment to HMRC,
however I do not find that this negates the statutory obligations with which he
must comply or the consequences of failing to do so.
17. I find as a fact
that the penalties were lawfully imposed and that there is no reasonable
excuse.
18. The appeal is
dismissed and penalties upheld.
19. 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: 4 MAY 2011
