Georgiou
| Jurisdiction | UK Non-devolved |
| Judgment Date | 02 July 2019 |
| Date | 02 July 2019 |
| Court | First Tier Tribunal (Tax Chamber) |
[2019] UKFTT 428 (TC)
Judge James Austen
Income tax – Self assessment – Late filing penalties – Reasonable excuse – Yes – Special circumstances – No – Appeal allowed – FA 2009, Sch. 55.
The First-tier Tribunal (FTT) allowed a taxpayer's appeal against late filing penalties. The FTT found that the taxpayer's belief that his return had been submitted by his agent was genuine and reasonable and therefore amounted to a reasonable excuse.
HMRC issued Mr Georgiou (the appellant) with late filing penalties in relation to his 2016–17 personal tax return. The appellant appealed on the basis that his agent had submitted his return online prior to the due date and had received a “submission receipt number”. HMRC disagreed with the appellant's contention that the return had been submitted, and asserted that the existence of such a reference number was insufficient evidence that a return had successfully been filed.
The FTT found that the appellant's agent did attempt to file the appellant's tax return online prior to the due date and that he genuinely believed he had done so successfully. While the FTT accepted HMRC's submission that the existence of the receipt number did not prove that a return had been filed – that was not the question before the tribunal. As set out in the Upper Tribunal (UT) case of Perrin v R & C Commrs [2018] BTC 513, the correct test to be applied when considering reasonable excuse arguments pursuant to FA 2009, Sch. 55, para. 23 was whether the genuinely held belief that the return had been filed was reasonable, having regard to all the circumstances of the matter, including the state of mind of the appellant and the reasonableness of the considerations he pointed to in support of his belief, especially the actions and beliefs of his agent.
The FTT concluded that the appellant's belief that his return had been filed was both genuine and a reasonable one for him to hold in the circumstances. He relied on his accountant to file his tax return. His accountant believed that the electronic return had been accepted by HMRC. The FTT found that belief to be a reasonable one in the circumstances.
The FTT also considered the issue of special circumstances pursuant to FA 2009, Sch. 55, para. 16. It noted that in Edwards v R & C Commrs [2019] BTC 516 the UT had confirmed the correct test to be applied when ascertaining if special circumstances existed. The FTT found that there were no special circumstances.
The FTT accordingly allowed the appeal in full and set aside the penalties.
This case usefully sets out both:
- the correct test to be applied when considering reasonable excuse arguments in the FTT as confirmed in the UT in Perrin v R & C Commrs [2018] BTC 513; and
- the correct test to be applied when ascertaining if special circumstances exist as confirmed in the UT in Edwards v R & C Commrs [2019] BTC 516.
[1] This is an appeal by Mr Andreas Georgiou (“the appellant”) against the following penalties:
- £100 imposed under paragraph 3 of Schedule 55 Finance Act 2009 (FA09) for the late filing of the Individual Tax Return for the year ending 5 April 2017;
- Daily penalties, totalling £900, imposed under paragraph 4 of Schedule 55 of FA09 for failing to file the Individual Tax Return for the year ending 5 April 2017 within three months of its due date; and
- £300 imposed under paragraph 5 of Schedule 55 of FA09 for failing to file the Individual Tax Return for the year ending 5 April 2017 within six months of its due date.
[2] I allow the appeal and set aside the penalties for the reasons set out below.
[3] HMRC claims that it sent a notice to file an individual tax return to the appellant for the tax year 2016/17 on 6 April 2017. There is every reason to doubt that date (see Platt [2019] TC 07131 at [11]–[12]), but the appellant acknowledged in his Reply that the due date for filing was either 31 October 2017 for a paper return or 31 January 2018 for an online return and as a result, nothing turns on the point. The appellant was within the self-assessment filing regime for that tax year and he knew and accepted the dates by which his return would have to be made to HMRC.
[4] The appellant instructs an accountant in general practice (Mr Ridler, of MJ Ridler Accounting Services (“Mr Ridler”)) to prepare and file his tax returns on the basis of information supplied by him. The evidence of the appellant and Mr Ridler is that Mr Ridler submitted an online return on behalf of the appellant at 0900 on 5 September 2017. By way of evidence for this, the appellant submits a letter from Mr Ridler dated 22 April 2019 in which he (re-)confirms these details and supplies an alphanumeric “Submission Receipt Number”, which (I infer) he says he received on submission of the appellant's tax return. HMRC states that it has no record of that filing.
[5] HMRC says that on or around 13 February 2018, it sent a late filing penalty to the appellant. As a result of the nature of HMRC's internal systems and processes, no copy of that penalty notice is before the Tribunal. Receipt of that purported notice is not admitted by the appellant – in fact, the episode is not covered at all in his evidence. However, there is a record on the printout of the appellant's “SA Notes” provided by HMRC which reads as follows:
7. 22/03/2018 DMS ID 000027 c155265 – DOR 8-3-18. Appeal against 16–17 LFP because IT difficulty with UTR number not displayed. Appeal rejected as unclear what problem encountered & ITR still not received. Appeal opened & close, SA633 and SA634 issd. No other DMS
[6] From this, I infer that the appellant or someone on his behalf (possibly Mr Ridler) contacted HMRC on 22 March 2018 to appeal against an initial late filing penalty and that appeal was dismissed by HMRC for the reasons stated. I accept that record (as I have understood it) as fact of the matters reported. As a result, I find on the balance of probabilities that the initial penalty had indeed been sent by HMRC to the appellant on or around 13 February 2018. No other explanation for the entry seems likely.
[7] Because the appellant's evidence does not deal with this exchange, it is not possible conclusively to identify what if any steps he took after 22 March 2018. HMRC's printout of the appellant's “SA Notes” includes entries on 23 May (x2), 24 May and 26 June, which seem to indicate that contact was initiated on those dates by the appellant or someone on his behalf. In any event, it is clear from the appellant's evidence that throughout this period he believed HMRC to be mistaken that his tax return was not submitted and that the penalties...
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