Atherton
| Jurisdiction | UK Non-devolved |
| Judgment Date | 20 November 2017 |
| Neutral Citation | [2017] UKFTT 831 (TC) |
| Date | 20 November 2017 |
| Court | First-tier Tribunal (Tax Chamber) |
[2017] UKFTT 0831 (TC)
Judge Rupert Jones, Susan Lousada
Mr Mandar Patel, Accountant and representative for the appellant
Colin Smithson and Philip Oborne, Presenting Officers of HMRC for the respondents
Value added tax registration – VAT penalties – Late appeal – Application for permission to appeal out of time – Data Select Ltd v R & C Commrs [2012] BVC 1,743 criteria – Application dismissed.
[1] Adam Akhtar (“the appellant”) applies for permission to admit a late appeal under rule 20(4)(b) of the Tribunal Rules. His appeal, together with this application, was notified to the Tribunal in a notice of appeal dated 16 October 2016.
[2] The appeal is against the following decisions of HMRC against the appellant:
- Four Notices of Assessment to Income Tax and National Insurance (as a self-employed car dealer) dated 14 September 2015 for the years ending 5 April 2011, 2012, 2013 & 2014 in the sums of £200, £5,037.29, £4,391.98 and £350 respectively. These Notices were also copied to the appellant's accountant and adviser, Mr Patel. The deadline for appeal to the Tribunal therefore expired on or around 14 October 2015, depending on the date the notices were given or issued to the appellant.
- A letter dated 23 September 2015 notifying the appellant of requirement to register for liability to be registered for Value Added Tax (VAT) for the period from 01/06/2011 to 31/07/2013 and assessment of VAT tax payable in the sum of £63,897.19. The decision to require registration for VAT was upheld as set out in a review decision letter dated 26 November 2015. The letter was also copied to the appellant's accountant and adviser, Mr Patel. The deadline for appeal to the Tribunal therefore expired on or around 26 December 2015.
- A notice of VAT penalty assessment in the sum of £18,530.18 dated 10 December 2015 for the appellant's failure to notify his obligation to register for VAT on or before the appropriate date. The deadline for appeal to the Tribunal therefore expired on or around 9 January 2016.
[3] In the bundle of papers the Tribunal received from the Tribunal Service in advance of the hearing, there was also a letter dated 7 October 2015 from HMRC. This was a Penalty Explanation notice explaining the penalties intended to be charged totalling £22,012.97. These were made up of the VAT penalty of £18,530.18 which was later issued on 10 December 2015 and two penalties for failure to notify self-employment income as a car dealer for the years ending 5 April 2011 and 2012 in the sums of £133 and £3,349.79.
[4] The Tribunal therefore infers that HMRC also went on to issue Penalties against the appellant in respect of Income tax and Class 4 National Insurance Contributions totalling £3,482.79 on 10 December 2015. However, no penalty notices were included within our papers and the appellant's appeal does not make reference to these penalties as being subject to appeal.
[5] The statutory deadline for appeals to the Tribunal against each of the decisions is 30 days following the giving of the notice or issuing of the decision. This appeal right and 30-day deadline were set out in clear terms within the notices at paragraph 2(a) and (c) which were sent to the appellant.
[6] The review and appeal rights communicated to the appellant and his accountant in respect of decision (b) are more complex. They are dealt with below.
[7] The application and appeal was made just over nine months out of time for the most recent decision under appeal and around one year out of time for the oldest decision.
[8] The Tribunal received a bundle of documents consisting of the appeal notice, HMRC's grounds of objection and correspondence beginning in 2015. The appellant did not attend nor provide any written evidence but representations were made on his behalf by Mr Patel.
[9] We find the following facts.
[10] On 14 September 2015 HMRC issued the appellant with four Notices of Assessment to Income Tax and National Insurance (as a self-employed car dealer). These were for the years ending 5 April 2011 to 2014 inclusive, in the sums of £200, £5,037.29, £4,391.98 and £350 respectively. These Notices were also copied to the appellant's accountant and adviser, Mr Patel. The right of appeal to the Tribunal and 30-day deadline were set out in clear terms within the notices.
[11] The appellant, nor Mr Patel acting on his behalf, did not appeal to the Tribunal against the assessment decision within the 30-day period for appeal, which deadline expired on or around 14 October 2015.
[12] On 23 September 2015 Rachael Blowers of HMRC wrote to the appellant informing him that he had been required to register for liability to be registered for Value Added Tax (VAT) for the period from 01/06/2011 to 31/07/2013. Pursuant to section 73 of the VAT Act 1994 he was assessed to payable VAT in the sum of £63,897.19 in respect of the whole period. The letter explained the review / appeal rights to the appellant. It gave him the option of applying to HMRC to review the decision within 30 days and / or appealing to the Tribunal within 30 days of the date of the letter.
[13] What the letter did not explain is that only the decision to register him for VAT was an appealable decision itself for the purposes of the VAT Act 1994 – the assessment to pay the amount of VAT could not itself be appealed under the Act.
[14] On 7 October 2015 Mr Patel, the appellant's accountant at Accountancy Solutions, wrote to Mr Richardson of HMRC stating “Further to our recent telephone conversation. Mr Akhtar wishes to lodge an appeal against your assessment on the following grounds”. The letter concluded the following “Mr Akthar admits to the selling of some vehicles and the failure to register for Self-Assessment. He believes the VAT debt would not be relevant as he is / would have been under the VAT threshold.”
[15] It can be seen that there is some ambiguity in the wording of Mr Patel's letter as to whether Mr Akhtar was seeking a review of the decision by HMRC or an appeal to the Tribunal.
[16] On 16 October 2015 HMRC have recorded a note of a conversation which took place between Mr Patel and an officer. While Mr Patel does not dispute that a conversation took place, he cannot recall it. We are satisfied that it took place as recorded. The officer of HMRC explained to Mr Patel the available and alternative routes to challenge a decision by way of appeal and review. During this conversation Mr Akhtar confirmed that he would like to proceed by way of a review of the decision by an independent officer of HMRC.
[17] On 26 November 2015 HMRC wrote to the appellant informing him of the outcome of the review of the decision to register him for VAT from 1 June 2011 to 31 July 2013. The letter provided reasons for upholding the original decision on conclusion of the review. It also explained “the remit of the review only falls to whether you were liable to be registered, section 83(1)(a) of the VAT Act 1994, the only appealable decision is the liability to be registered for VAT.” The letter also states that a copy of this review decision would be sent to his representative, Mr Patel.
[18] What HMRC's letter does not do is explain the rights of challenge to the review decision – namely to appeal to the Tribunal within 30 days and that no further rereview would be conducted by HMRC unless new information was presented. The letter simply refers the recipient to further information about appeals and reviews on HMRC's website. This was not as helpful as HMRC might reasonably have been, albeit that the original decision of 23 September 2015 contained more helpful guidance on the rights of appeal and review.
[19] The appellant, or Mr Patel acting on his behalf, did not appeal to the Tribunal against the review decision within the 30-day period deadline for appeal which expired on or around 26 December 2015.
[20] On 10 December 2015 HMRC issued the appellant with a notice of VAT penalty assessment in the sum of £18,530.18 for the appellant's failure to notify his obligation to register for VAT on or before the appropriate date. The right of appeal to the Tribunal and 30-day deadline were set out in clear terms within the notice.
[21] The appellant, or Mr Patel acting on his behalf, did not appeal to the Tribunal against the penalty decision within the 30-day period deadline for appeal which expired on or around 9 January 2016.
[22] In the bundle of papers we received from the Tribunal Service in advance of the hearing there was also a letter dated 7 October 2015 which was a Penalty Explanation explaining the penalties intended to be charged totalling £22,012.97. These are made up of two schedules: a) the VAT penalty of £18,530.18 which was issued on 10 December 2015 and b) two penalties for failure to notify self-employment income as a car dealer for the years ending 5 April 2011 and 2012 in the sums of £133 and £3,349.79. We therefore infer on the balance of probabilities that there were likely to have been direct tax penalties totalling £3,482.79 also issued on 10 December 2015. In any event, these are not subject to appeal.
[23] On 8 February 2016 Mr Patel wrote to HMRC stating that the appellant did not agree with the review findings as to his registration for VAT and VAT assessment raised. The letter raised further issues as to the nature of his trade in second hand cars. It concluded “To avoid a tribunal we would like to be informed if any of the above would help reaching a reasonable settlement to this matter.”
[24] During the hearing Mr Patel explained that the reason for the delay between the review decision of 26 November 2015 and 8 February 2016 was that he was seeking the information from the appellant which was relied on within the letter and that the appellant had needed to obtain this. In addition, the 31 January deadline for filing tax returns and making payments had intervened and...
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