Butterworth

JurisdictionUK Non-devolved
Judgment Date29 August 2018
Neutral Citation[2018] UKFTT 521 (TC)
Date29 August 2018
CourtFirst Tier Tribunal (Tax Chamber)

[2018] UKFTT 0521 (TC)

Judge Tony Beare, Mr David Williams

Butterworth

Mr Michael Butterworth appeared for the appellant

Mr Gareth McKinley, Officer of HM Revenue and Customs, appeared for the respondents

Income tax – Penalties for failing to file self-assessment returns in order to claim relief for expenses exceeding £2,500 – Whether the penalties under FA 2009, Sch. 55, para. 5 and 6 in respect of one of the tax years of assessment were properly determined in the light of para. 17(3) of that Schedule – Yes – Whether the penalty notices were received by the Appellant and complied with the requirements of FA 2009, Sch. 55 – Yes – With one exception – Whether the respondents exceeded their powers in requiring the returns to be filed – No – Whether the fact that the appellant was due to receive a repayment of tax following submission of the returns amounted to special circumstances – No – Whether the appellant had a reasonable excuse for his failure – No – Appeal upheld in part.

DECISION
Introduction

[1] This decision relates to seven penalties which have been imposed by the Respondents on the Appellant as follows:

  • A penalty of £100 under paragraph 3 of Schedule 55 Finance Act 2009 (Schedule 55) for a failure to file a self-assessment return in respect of the tax year of assessment ending 5 April 2015 by the date on which it was required to be filed (in relation to a tax year of assessment, the filing date, in relation to that tax year of assessment);
  • A penalty of £900 under paragraph 4 of Schedule 55 comprising £10 for each day after the period of 3 months beginning with the day after the filing date in relation to the tax year of assessment ending 5 April 2015 (in relation to a tax year of assessment, the penalty date in relation to that tax year of assessment) in which the above failure to file a self-assessment return in respect of the tax year of assessment ending 5 April 2015 continued, up to a maximum of 90 days;
  • A penalty of £300 under paragraph 5 of Schedule 55 for a failure to file a self-assessment return in respect of the tax year of assessment ending 5 April 2015 by the date falling 6 months after the penalty date in relation to that tax year of assessment;
  • A penalty of £300 under paragraph 6(5) of Schedule 55 for a failure to file a self-assessment return in respect of the tax year of assessment ending 5 April 2015 by the date falling 12 months after the penalty date in relation to that tax year of assessment;
  • A penalty of £100 under paragraph 3 of Schedule 55 for a failure to file a self-assessment return in respect of the tax year of assessment ending 5 April 2016 by the filing date in relation to that tax year of assessment;
  • A penalty of £900 under paragraph 4 of Schedule 55 comprising £10 for each day after the period of 3 months beginning with the penalty date in relation to the tax year of assessment ending 5 April 2016 in which the above failure to file a self-assessment return in respect of that tax year of assessment continued, up to a maximum of 90 days; and
  • A penalty of £300 under paragraph 5 of Schedule 55 for a failure to file a self-assessment return in respect of the tax year of assessment ending 5 April 2016 by the date falling 6 months after the penalty date in relation to that tax year of assessment.
Background

[2] The background to the appeal to which this decision relates is as follows:

  • The Appellant contacted the Respondents by letter dated 17 January 2016 seeking a tax refund in relation to expenses incurred wholly, exclusively and necessarily in the performance of his duties as an employee of a company called N J Richards Projects Limited in the tax year of assessment ending 5 April 2015;
  • The amount of the expenses claimed was greater than £2,500 and the Respondents' published policy was to require any such claim to be made by filing a self-assessment return. Accordingly, the Respondents allege that they wrote to the Appellant on 26 February 2016 to inform him that he would need to file a self-assessment return in respect of the tax year of assessment ending 5 April 2015 and that they sent to the Appellant on 3 March 2016 a self-assessment return (including a notice to file) in respect of the tax year of assessment ending 5 April 2015;
  • On 2 June 2016, the Appellant contacted the Respondents by letter seeking a tax refund in relation to expenses incurred wholly, exclusively and necessarily in the performance of his duties as an employee of N J Richards Projects Limited in the tax year of assessment ending 5 April 2016;
  • The amount of the expenses claimed in the Appellant's letter of 2 June 2016 was greater than £2,500 and the Respondents' published policy was to require any such claim to be made by filing a self-assessment return. Accordingly, the Respondents allege that they wrote to the Appellant on 29 July 2016 and then again on 17 May 2017 to inform him that he would need to file a self-assessment return in respect of the tax year of assessment ending 5 April 2016 (and, in the case of the letter of 17 May 2017, reminding the Appellant that the self-assessment return in respect of the relevant tax year of assessment was still outstanding) and that they issued to the Appellant on 4 August 2016 a notice to file a tax return in respect of the relevant tax year of assessment;
  • The Respondents allege that, on 14 June 2016, they issued a letter to the Appellant in the form of the template letter SA326D included at page 72 of the hearing bundle imposing the late filing penalty in respect of the tax year of assessment ending 5 April 2015 and referring to the fact that, if the return was not received by a specified date, the daily £10 penalty would start to accrue in respect of the tax year of assessment ending 5 April 2015;
  • In relation to the tax year of assessment ending 5 April 2015, the Respondents allege that they issued to the Appellant on 11 October 2016 a 30 day late filing daily penalty reminder, that they issued to the Appellant on 15 November 2016 a 60 day late filing daily penalty reminder, that they issued to the Appellant on 13 December 2016 a letter imposing the £900 late filing daily penalty and the £300 6 months' late filing penalty and that they issued to the Appellant on 13 June 2017 the £300 12 months' late filing penalty. The actual letters referred to in this paragraph were not included in the hearing bundle but templates of those actual letters were provided to us at the hearing;
  • The Respondents allege that, on 7 February 2017, they issued a letter to the Appellant in the form of the template letter SA326D included at page 72 of the hearing bundle imposing the late filing penalty in respect of the tax year of assessment ending 5 April 2016 and referring to the fact that, if the return was not received by a specified date, the daily £10 penalty would start to accrue in respect of the tax year of assessment ending 5 April 2016;
  • In relation to the tax year of assessment ending 5 April 2016, the Respondents allege that they issued to the Appellant on 6 June 2017 a 30 day late filing daily penalty reminder, that they issued to the Appellant on 4 July 2017 a 60 day late filing daily penalty reminder and that they issued to the Appellant on 11 August 2017 a letter imposing the £900 late filing daily penalty and the £300 6 months' late filing penalty. The actual letters referred to in this paragraph were not included in the hearing bundle but templates of those actual letters were provided to us at the hearing;
  • On 30 August 2017, the Respondents received the Appellant's on-line self-assessment returns in respect of the tax year of assessment ending 5 April 2015 and the tax year of assessment ending 5 April 2016;
  • The Appellant appealed against the above penalties on 16 October 2017 and the Respondents rejected the appeal on 13 November 2017;
  • Following a request for a review made by the Appellant on 11 December 2017 (enclosing a letter dated 4 December 2017 which set out the grounds for his request), the Respondents informed the Appellant on 24 January 2018 that its decision to charge the penalties was correct;
  • Following a further appeal made by the Appellant on 15 February 2018, the Respondents wrote to the Appellant on 23 February 2018 once again rejecting the appeal; and
  • On 9 April 2018, the Appellant notified the First-tier Tribunal of the appeal.
The relevant law

[3] The penalties for failing to make a self-assessment return are contained in Schedule 55.

[4] Paragraph 1(1) of Schedule 55 provides that a taxpayer is liable to a penalty if he or she fails to deliver a return of a type specified in that paragraph by the filing date. A self-assessment return under section 8 TMA 1970 is one of the returns specified in that paragraph.

[5] Paragraph 3 of Schedule 55 specifies that the penalty in question is £100.

[6] Paragraph 4 of Schedule 55 specifies that the taxpayer is liable to a penalty of £10 a day for up to 90 days if the return continues to remain unfiled after the date falling 3 months from the filing date.

[7] Paragraph 5 of Schedule 55 specifies that the taxpayer is liable to a penalty which is the higher of 5% of the liability to tax which would have been shown on the relevant return and £300, if the return is more than 6 months late.

[8] Finally, paragraph 6(5) of Schedule 55 specifies that the taxpayer is liable to a penalty which is the higher of 5% of the liability to tax which would have been shown on the relevant return and £300, if the return is more than 12 months late.

[9] The legislation provides that a taxpayer may be relieved from penalties if he or she can show that there was a “reasonable excuse” for the default. Curiously, there are two potentially applicable “reasonable excuse” provisions in this case, which are not identical. This is because the obligation to file the return is set out in the Taxes Management Act 1970 (the “TMA 1970”), which contains a relief in cases of reasonable excuse at section 118(2) TMA 1970...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT