Francis
| Jurisdiction | UK Non-devolved |
| Judgment Date | 08 July 2016 |
| Neutral Citation | [2016] UKFTT 484 (TC) |
| Date | 08 July 2016 |
| Court | First Tier Tribunal (Tax Chamber) |
Judge Harriet Morgan, Member: Mr Leslie Howard
The Appellant did not appear and was not represented at the hearing
Mr Matthew Mason, an officer of the Respondents, appeared for the respondents (“HMRC”)
Income tax – Application to make a late appeal against an assessment under Taxes Management Act 1970 (“TMA 1970”), s. 29 amendments made under TMA 1970, s. 28 and related penalties – Application refused.
[1] The appellant applied to be able to make a late appeal against an income tax assessment made by HMRC for the tax year 2006/07 (under s 29(1) of the Taxes Management Act 1970 (“TMA”)), amendments to the appellant's self assessment tax returns for the tax years 2008/09 to 2011/12 (made under s 28A TMA) and related penalties as further set out in the facts below.
[2] The appellant did not attend and was not represented at the hearing. We attempted to contact the representative by telephone but received no response. The appellant did not give any prior notification or reason for not attending. We were satisfied that the appellant and the representative had been notified of the hearing and given the full opportunity to attend. Having regard to the rules governing the tribunal and, in particular, the overriding objective of dealing with matters fairly and justly, we decided that, as the appellant had been given the opportunity to attend and had not requested a postponement and as HMRC were present and prepared, we should proceed with the hearing.
[3] We have based our view of the facts on the bundle of documents presented by HMRC.
[4] On 18 October 2012 HMRC notified the appellant of an enquiry into the appellant's self assessment tax returns for the tax years 2008/09, 2009/10, 2010/11 and 2011/12 (under s 9A TMA). The enquiries related to the level of the appellant's taxable income from her activities as an accountant both as an employee and as a sole trader. On the same day HMRC issued an information notice under para 1 of Schedule 36 to the Finance Act 2008 (“Schedule 36”) requiring the production by 23 November 2012 of the specified information and documents for the tax years 2010/11 and 2011/12.
[5] The appellant's agent at the time, Macs Accountants Ltd, provided some of the requested information on 19 November 2012. On 29 November 2012, as not all the requested information and documents had been produced, HMRC issued two fixed penalties of £300 under para 39 of Schedule 36. The penalty notices stated that further penalties may be due if the requested information and documents were not produced by 31 December 2012. The notices were issued direct to the appellant. On the same day HMRC wrote the appellant explaining what had been received to date from Macs Accountants Ltd and what remained to be produced.
[6] On 8 January 2013 as no further information or documents had been received HMRC issued daily penalties under para 40 of Schedule 36. On the same day HMRC wrote to the appellant setting out HMRC's proposals to settle the enquiries and warning of further penalties for submitting inaccurate returns. HMRC advised that similar inaccuracies were identified in the appellant's tax return for the tax year 2006/07.
[7] On 13 February 2013 HMRC issued an assessment for the tax year 2006/07 under s 29(1) TMA 1970.
[8] On 18 March 2013 HMRC:
1) issued closure notices and amendments to the appellant's returns under s 28A(1) and (2) TMA for each of the tax years 2008/09, 2009/10, 2010/11 and 2011/12;
2) advised that penalty notices would be issued under s 95 TMA for the tax year 2006/07 and under Schedule 23 of the Finance Act 2007 for the tax years 2008/09, 2009/10, 2010/11 and 2011/12; and
3) issued the penalty notice for the tax year 2007/08.
[9] On 24 April 2013 HMRC issued penalty notices for the tax years 2008/09, 2009/10, 2010/11 and 2011/12.
[10] The various assessments and notices contained details of the appellant's appeal rights and the time limits for making such an appeal.
[11] On 18 December 2013 the appellant's representative, Lennox McCloud of Taylor Allen Ltd, contacted HMRC regarding the above matters. HMRC advised that, as they held no authority from the appellant regarding that firm, they were unable to discuss the matter with him. HMRC subsequently received this authority in a letter from Taylor Allen Ltd dated 18 December 2013. In this letter they also requested further information regarding the enquiries and stated that delays in dealing with these were due to the appellant's previous advisers, Macs Accountants Ltd.
[12] On 18 December 2013 HMRC had a telephone call with the appellant who confirmed that she had received all of the above amendments, assessments and notices.
[13] On 30 January 2014 HMRC informed Mr McCloud of Taylor Allen Ltd of the closure of the enquiries and that the appellant had confirmed that she had received all of the closure notices and related amendments, assessment and penalty notices. They noted that the time limit for appealing against each of these had expired and that they could accept a late appeal only if the appellant had a reasonable excuse for not appealing within the applicable time limit and appealed as soon after she could after the excuse ended. They did not consider the appellant had a reasonable excuse for not appealing to HMRC within the applicable time limits.
[14] In that letter HMRC said they did not understand why Taylor Allen Ltd considered any delays on the appellant's behalf to be the fault of Macs Accountants Ltd as HMRC records show that Mr McCloud worked for that business prior to working for Taylor Allen Ltd. HMRC also noted that the appellant's tax returns for 2007/08 to 2011/12 showed that she was employed by Macs Accountants in the years 2008/09, 2009/10, 2010/11 and 2011/12. A copy of the letter was also sent to the appellant.
[15] On 21 March 2014 the appellant submitted a late appeal to HMRC as follows:
I am writing to inform you that I am appealing against your decision to close my tax enquiry. In the circumstances I am hereby requesting that all request for payment to be suspended until we know the outcome of the appeal. I believe that my circumstances are a good reason for the perceived lack of cooperation. Re-opening the enquiry will afford me the opportunity to respond fully.
[16] On 28 March 2014 the appellant applied to the tribunal for permission to make a late appeal. The appellant states the reason for why the appeal is made late to be as follows:
I was only made aware recently that the enquiry has been closed. This was never communicated to me by any means.
[17] The grounds for appeal are stated to be that:
I am appealing because I was not given a fair chance to respond fully to the enquiry. My previous accountants (Macs Accountants Ltd) went into liquidation during the time, and I was not made aware of this until HMRC contacted me. I have managed to put some information together, and now have a new agent who assured me that they will be able to assist if given the opportunity.
[18] The appellant states in the notice of the appeal that the result should be that the enquiry is reopened to allow her to respond fully.
[19] On 10 June 2014 HMRC notified the appellant that they did not agree to the late appeal on the basis that the appellant did not have a reasonable excuse.
[20] We have taken the appellant's submissions to be as set out in the notice of appeal.
[21] HMRC's submissions are as follows:
1) The appellant has no reasonable excuse for the failure to make the appeal within the applicable time limits. HMRC's view is that a person has a reasonable excuse only where an event beyond the person's control prevents them from sending in an appeal within the time limit.
2) In this case the appellant states the failure was due to her previous accountants, Macs Accountants Ltd, going into liquidation, and that she was unaware of the closure of the enquiries as this information was not communicated to her.
3) As regards the position of the former accountants, HMRC's view is that reliance on a third party does not constitute a reasonable excuse.
4) As regards the claim that the appellant was not notified of the relevant matters, this is not correct. The letters were sent to the appellant's home...
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...and set out their position as follows: Purpose of the time limit – Ms Shakeel referred to the decision of the Tribunal in Francis [2016] TC 05234 at [45] and stated that HMRC agreed with the Tribunal's conclusions in that case that the purpose of the time limit of 30 days is to provide both......