Ferguson
| Jurisdiction | UK Non-devolved |
| Judgment Date | 21 December 2017 |
| Neutral Citation | [2017] UKFTT 0897 (TC) |
| Date | 21 December 2017 |
| Court | First Tier Tribunal (Tax Chamber) |
[2017] UKFTT 0897 (TC)
Judge Jonathan Richards
The appellant appeared in person
Sophie Rhind, Officer of HM Revenue & Customs, appeared for the respondents
Income tax – Accelerated payment notice – Whether notice duly served – Yes – Whether reasonable excuse for failure to pay – No – Whether a special reduction warranted – No – Appeal dismissed.
[1] Mrs Ferguson has been issued with a first, second and third penalty for failing to pay the “disputed tax” specified in an accelerated payment notice by the due date. HMRC have withdrawn the first penalty, but continue to pursue the second and third penalty and Mrs Ferguson is appealing against those penalties.
[2] I heard oral evidence from Mrs Ferguson and Ms Rhind cross-examined her. I considered that Mrs Ferguson gave her evidence honestly. I have not accepted all of the evidence that Mrs Ferguson gave. However, that was simply because I regarded her as mistaken on one or two issues.
[3] There was also evidence in the form of a bundle of documents.
[4] In the tax year 2010–11, Mrs Ferguson participated in the “Edge Consulting” arrangements. Those arrangements were notified to HMRC under the rules in Finance Act 2014 applicable to tax avoidance schemes (“DOTAS”) and HMRC allocated the scheme the reference number 08961695.
[5] On 14 November 2013, HMRC issued Mrs Ferguson with a discovery assessment under s29 of the Taxes Management Act 1970 (“TMA 1970”) broadly on the grounds that they did not consider that the Edge Consulting scheme was effective and that accordingly Mrs Ferguson had an additional tax liability for the 2010–11 tax year.
[6] On 16 January 2014, Mrs Ferguson appealed to HMRC against this discovery assessment. HMRC agreed, under s55 of TMA 1970 to postpone collection of the amount of tax in dispute.
[7] Until early 2015, Mrs Ferguson lived at an address in Maltby Street. She then moved to a new address in Pages Walk. She did not tell HMRC of her new address until 17 June 20151.
[8] On 20 May 2015, HMRC sent an accelerated payment notice (“APN”) in accordance with s229 of Finance Act 2014 (“FA 2014”) to Mrs Ferguson at her address in Maltby Street which was the address that HMRC had on file for her since Mrs Ferguson had not yet notified HMRC of her change of address. HMRC also sent a copy to Mrs Ferguson's accountant and duly appointed tax agent, Johal & Co. I am satisfied that this was an accelerated payment notice as defined in s219 of FA 2014 since it answered to the statutory description of an accelerated payment notice. I will not, however, make a finding to the effect that all pre-conditions necessary for HMRC to issue an APN were satisfied. Condition A set out in s219(2) of FA 2014 was met (since Mrs Ferguson had appealed to HMRC against the discovery assessment that they had made). HMRC offered no evidence that Condition B or Condition C2 was met. However, for reasons that I explain in the Discussion section, I do not consider this affects the validity of the penalty that has been charged.
[9] The APN informed Mrs Ferguson she had to make an accelerated payment of £8,272.60 by 21 August 2015. The figure of £8,272.60 was HMRC's calculation of the “disputed tax” being the amount necessary to counteract the tax advantage that Mrs Ferguson was claiming from the Edge Consulting scheme.
[10] On or around 4 June 2015, Mrs Ferguson and HMRC had a telephone discussion. The outcome of that telephone conversation was that HMRC accepted that Mrs Ferguson had not seen the APN that they had sent her. On 4 June 2015, HMRC sent a further copy of that APN but again sent it to the address in Maltby Street. Mrs did not say in her evidence that she told HMRC of her change of address during the telephone conversation of 4 June and that HMRC were therefore wrong to send the further APN to the Maltby Street address. Given that HMRC's records show the change of address as being recorded on 17 June 2017, I have concluded that Mrs Ferguson did not mention her change of address to HMRC during the telephone conversation of 4 June and, accordingly, that HMRC sent the further copy of the APN to the address that they had on file for Mrs Ferguson at the time. Since the further copy of the APN was sent to the Maltby Street address, Mrs Ferguson did not receive it.
[11] On 27 July 2015, HMRC wrote to Mrs Ferguson to remind her that the disputed tax totalling £8,272.60 was due to be paid by 21 August 2015. By then Mrs Ferguson had told HMRC of her change of address so this letter was sent to her address in Pages Walk and Mrs Ferguson accepted that she received it. The letter included the following paragraph:
If you have made representations about the accelerated payment notice, or intend to make them before the date that payment is due, then the deadline for paying may change. You can find more information about this in the accelerated payment notice that we sent to you on 20 May 2015.
[12] Mrs Ferguson's evidence was that she made a number of calls in July and August 2015 to seek to obtain a copy of the APN from HMRC but that problems with the post at her new address in Pages Walk meant that she still did not receive it. I accept Mrs Ferguson's unchallenged evidence that there were problems with the post in Pages Walk as a result of her house being in a new development in which all houses appeared to share the same address thus confusing local postal workers. However, I have not accepted that she made further calls to HMRC to try to obtain a copy of the APN in July or August for the following reasons:
- She was unable to produce specific dates on which the telephone calls took place and there is no record of them in the SA Notes that HMRC produced as evidence.
- Mrs Ferguson's evidence as to when the calls took place was somewhat confused. She repeatedly said that she was in regular contact with HMRC when the debt was brought to my attention. But the date on which the accelerated payment was due was 21 August 2015 and, until then, there was no debt that HMRC would have sought to brought to her attention (beyond issuing the reminder letter on 27 July 2015). I consider that it is more likely than not that when Mrs Ferguson referred in her evidence to numerous telephone conversations with HMRC, she was referring to conversations after 21 August 2015 in response to HMRC's attempts to collect the accelerated payment of £8,272.60.
- On 27 October 2015, Mrs Ferguson called HMRC having received a letter from HMRC's Debt Management department regarding the accelerated payment. In that call she said that she didn't know why HMRC considered that she owed them money. However, if she had been making numerous calls to HMRC to obtain a copy of the APN she would have been in no doubt that the APN asserted that she owed £8,272.60 and would, in her telephone conversation of 27 October 2015, have been more likely to express frustration that, despite repeated requests, she had still not been provided with a copy of the APN itself.
[13] Mrs Ferguson was aware...
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