Duncan
| Jurisdiction | UK Non-devolved |
| Judgment Date | 24 April 2017 |
| Neutral Citation | [2017] UKFTT 340 (TC) |
| Date | 24 April 2017 |
| Court | First Tier Tribunal (Tax Chamber) |
Judge Jonathan Richards
Income tax – Penalties for failure to make return – HMRC's burden of proof when daily penalties charged – Appeal against daily penalties allowed – Appeal against £100 penalty dismissed – Finance Act 2009 (“FA 2009”), Sch. 55.
The First-tier Tribunal (FTT) allowed a taxpayer's appeal against daily late filing penalties because HMRC had not proved that they had met the requirements enabling them to charge the penalties, but dismissed the appeal against the initial £100 late filing penalty because the taxpayer did not have a reasonable excuse and nor were there special circumstances.
HMRC charged the appellant (Mrs Duncan) an initial £100 late filing penalty pursuant to Finance Act 2009 (“FA 2009”), Sch. 55, para. 3 and daily penalties of £630 pursuant to FA 2009, Sch. 55, para. 4, in respect of her 2011–12 tax return. Mrs Duncan appealed on the grounds that:
a) she had submitted the return on time;
b) there were failures in HMRC's administration; and
c) the penalties were disproportionate.
The FTT rejected Mrs Duncan's assertion that the return had been submitted on time. Mrs Duncan had no proof that her return had been completed or posted, whereas HMRC's records substantiated their argument that the return was late. The £100 penalty was therefore due and the FTT could see no “reasonable excuse” or “special circumstances” that led to a different conclusion.
The FTT found that HMRC had not produced any evidence to prove that they had sent any document to Mrs Duncan specifically notifying her of the date from which daily penalties would become payable, as required by FA 2009, Sch. 55, para. 4(1)(c). HMRC submitted that they had met the requirement, but without proof of such a notice (e.g. an SA Reminder or an SA 326D notice, as was provided in the case of Donaldson v R & C Commrs TAX[2016] BTC 28) the FTT was not satisfied that the requirement had been met.
Mrs Duncan had been sent a letter including the following section on daily penalties:
If your tax return is more than three months late, we will charge a penalty for each day it remains outstanding. Daily penalties may already be building up. To stop the amount of daily penalties that we may charge you from increasing, you can file your tax return online.
The FTT found that the problem with the letter was that (unlike the SA Reminder and SA 326D notice in Donaldson) it did not specify any date from which daily penalties would become payable. The FTT also did not think that the letter could fairly be read as saying that daily penalties would start to accrue for every day more than three months that the tax return remained outstanding (but rather that once the return was three months late, daily penalties would accrue from the day after the paper return should have been submitted) and therefore contravened the requirement in FA 2009, Sch. 55, para. 4(3)(b), which states that the date specified in the notice could not be earlier than three months after the penalty date.
Although Mrs Duncan had not argued that the requirement in FA 2009, Sch. 55, para. 4(1)(c) had not been met, the FTT noted that HMRC had the burden of proving the daily penalties were chargeable as was found in Burgess and Brimheath Developments Ltd v R & C Commrs TAX[2015] BTC 533, and this had not been done.
The FTT did not consider that it had power to discharge the penalty on the grounds of proportionality (following R & C Commrs v Bosher TAX[2013] BTC 2,126). The FTT did not have the power to deal with complaints about HMRC's administration.
The FTT accordingly upheld the £100 penalty and cancelled the £630 daily penalties.
HMRC had sent the taxpayer a letter including a warning about daily late filing penalties, but the FTT found that it did not allow HMRC to charge daily penalties because it did not specify the date from which the penalties would become payable. Even if the letter could be read as saying when daily penalties would start to accrue it was wrong because rather than saying that...
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Margott (as representative member of MDL Property Consultants LLP
...partnership equivalents, so HMRC have not shown that the condition in paragraph 4(1)(c) Schedule 55 has been complied with. (See Duncan [2017] TC 05817 (Judge Jonathan Richards)). I would therefore have cancelled them had it been relevant.Decision [105] Under paragraph 22(1) Schedule 55 Fin......
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Hansard
...in the papers, so HMRC have not shown that the condition in paragraph 4(1)(c) Schedule 55 FA 2009 has been complied with – see Duncan [2017] TC 05817 (Judge Jonathan Richards). [81] We therefore cancel the daily penalties.Initial 6 month late filing penalties under paragraph 5 Schedule 55 2......
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Trustees of the Paul Hogarth Life Interest Trust 2008
...a reasonable time had elapsed after receipt of the first penalty notice. However, with respect to the daily penalties, following Duncan [2017] TC 05817, HMRC had not shown, in the absence of HMRC's SA reminder or SA 326D (as cited by the Court of Appeal in Donaldson v R & C Commrs [2016] BT......
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Hogg (as executor of Dodd)
...2009, Sch. 55, para. 4(1)(c) had been met notifying the appellant the date from which daily penalties would become payable (see Duncan [2017] TC 05817). The tribunal noted that the appellant did not have a reasonable excuse for the failure to file on The tribunal also considered whether the......