Groves
| Jurisdiction | UK Non-devolved |
| Judgment Date | 15 June 2018 |
| Neutral Citation | [2018] UKFTT 311 (TC) |
| Date | 15 June 2018 |
| Court | First Tier Tribunal (Tax Chamber) |
[2018] UKFTT 0311 (TC)
Judge Nigel Popplewell
FA 2009, Sch. 55 – TMA 1970, s. 8 – Lennon [2018] TC 06453 – Wood [2018] TC 06339 – Patel [2018] TC 06426 – Donaldson v R & C Commrs [2016] BTC 28.
The appellant concerns whether HMRC issued a valid notice to file. The Appeal was allowed.
The Appeal was against penalties under FA 2009, Sch. 55 for the late filing of an individual tax return for the tax year 2014–2015. The respondent's Statement of Case withdrew the case for the daily penalties.
HMRC provided evidence that a valid notice to file was issued to the appellant on 21 July 2016:
- An extract from computer records entitled Return Summary indicating that a notice to file was issued on 21 July 2016;
- An extract from HMRC's computer records indicating that a notice to file was sent; and
- A generic copy of a notice to file.
The First-tier Tribunal (FTT) were unable to conclude that a notice was so given for the following reasons:
- There is no signature block on the pro forma letter;
- There was nothing in the Statement of Case which suggested that a notice to file was given by an officer;
- There is nothing in the computer printouts which indicates whether an officer, gave a notice to file to the appellant;
- The wording in the pro forma letter was in the third person.
There were two other letters submitted dated 20 September 2017 and 20 November 2017. The first contained a signature block indicating that it was written by an Assistance Officer and the second had no signature block. The identity of the person who wrote the letters was therefore unidentifiable. The letters did not demonstrate that a notice to file was given by a named officer.
The FTT found that no valid notice to file under TMA 1970, s. 8(1)(a) was given to the appellant by an officer of the Board. The Appellant had not failed to deliver a return under TMA 1970, s. 8(1)(a). The penalties were invalidly assessed and notified to the appellant and the appeal was allowed.
The case follows other recent decisions such as that in Loial [2018] TC 06391 where HMRC have relied on evidence which doesn't stand up to scrutiny to demonstrate a valid notice was issued.
[1] This is an appeal against the following penalties, visited on the appellant under Schedule 55 Finance Act 2009 for the late filing of an individual tax return for the tax year 2014–2015.
- A late filing penalty of £100 (late filing penalty).
- Daily penalties of £900 (the daily penalties).
- A 6 month late filing penalty of £300 (6 month penalty).
[2] The respondents (or “HMRC”) have said in their Statement of Case that they will not be putting a case for the daily penalties and thus they accept that that aspect of the appeal should be allowed. This appeal, therefore, is against the late filing penalty and the 6 month penalty.
[3] However, in their Statement of Case, HMRC (under the Facts section) tell me that they issued a notice of penalty assessment on or around 12 July 2016 in the amount of £300 by way of a 12 month penalty. However, they do not say that the appellant is appealing against this 12 month filing penalty. They simply (once the case for the daily penalties has been withdrawn) tell me that the taxpayer is appealing against the late filing penalty and the 6 month penalty. Extracts from HMRC's computerised records deal only with the late filing penalty, the daily penalties and the 6 month penalty. The review letter dated 20 September 2017 deals with only these three penalties. The grounds of appeal shed no light.
[4] So it is not at all clear to me that HMRC did in fact give notice of a penalty assessment for a 12 month penalty to Mr Groves. But if they did then:
- I am content that Mr Groves appeal should include an appeal against any such 12 month penalty; and
- My decision in this case relating to the late filing penalty and the 6 month penalty applies equally to any 12 month penalty so assessed on Mr Groves.
[5] From the papers before me I find the following relevant facts:
- The appellant was in employment during the 2014–2015 tax year, but HMRC considered that he had underpaid PAYE income tax of £166.80.
- On 26 October 2015 HMRC sent the appellant a P800 tax calculation for the year showing an underpayment of tax of £166.80.
- On 25 January 2016 a voluntary payment letter was sent to the appellant asking him to pay the amount or come to an arrangement to pay and, if he didn't, collection would be made via the self-assessment system.
- On 18 April 2016 a second voluntary payment letter was sent to the appellant informing him that because he hadn't made a voluntary payment or come to an arrangement to pay, the underpayment would be collected via the self-assessment system.
- On 11 July 2016 (the appellant not having responded to either of the voluntary payment letters) his record was automatically put into the self-assessment system to collect the underpaid amount.
- The purported notice to file for the year was issued to the appellant on 21 July 2016 to the address held on HMRC's records at the time. I deal in more detail with the evidence adduced by HMRC to support their contention that such a notice to file was served on Mr Groves at [22–26] below.
- The filing date for a valid notice to file, served on Mr Groves on 21 July 2016, would have been 28 October 2016 for both a non-electronic and electronic return.
- As the return was not received by the filing date, HMRC issued a notice of penalty assessment to the appellant on or around 18 February 2014 for the late filing penalty.
- As the return had still not been received 6 months after the penalty date, HMRC issued a notice of penalty assessment on or around 12 January 2016 for the 6 month penalty.
[6] A summary of the relevant legislation is set out below:
- Under section 8 of the Taxes Management Act 1970 (TMA 1970), a taxpayer, chargeable to income tax and capital gains tax for a year of assessment, who is required by an officer of the Board to submit a tax return, must submit that return to that officer by 31 October immediately following the year of assessment (if filed by paper) and 31 January immediately following the year of assessment (if filed on line).
- Failure to file the return on time engages the penalty regime in Schedule 55 Finance Act 2009 (Schedule 55) and references below to paragraphs are to paragraphs in that Schedule.
- Penalties are calculated on the following basis:failure to file on time (i.e. the late filing penalty) – £100 (paragraph 3).failure to file for three months (i.e. the daily penalty) – £10 per day for the next 90 days (paragraph 4).failure to file for 6 months (i.e. the 6 month penalty) – 5% of payment due, or £300 (whichever is the greater) (paragraph 5).
- In order to visit a penalty on a taxpayer pursuant to paragraph 4, HMRC must decide if such a penalty is due and notify the taxpayer, specifying the date from which the penalty is payable (paragraph 4).
- If HMRC considers a taxpayer is liable to a penalty, it must assess the penalty and notify it to the taxpayer (paragraph 18).
- A taxpayer can appeal against any decision of HMRC that a penalty is payable, and against any such decision as to the amount of the penalty (paragraph 20).
- On an appeal, this tribunal can either affirm HMRC's decision or substitute for it another decision that HMRC had the power to make (paragraph 22).
[7] The burden of establishing that the appellant is prima facie liable to the penalties which must be assessed and notified in accordance with the law lies with HMRC. It is for them to prove each and every factual matter said to justify the imposition of the penalties on this particular taxpayer.
[8] The standard of proof is the civil standard of proof namely the balance of probabilities or more likely than not.
[9] The penalties in this case have been assessed and notified on and to the appellant under paragraph 18 of Schedule 55.
[10] To come within the Schedule 55 penalty regime, a taxpayer must have failed to make or deliver a return, or to deliver any other document, specified in the “Table below” on or before the relevant filing date (paragraph 1(1) of Schedule 55).
[11] The item in the “Table below” which is relevant in this case is item 1 which relates to income tax. The relevant return is a “Return undersection 8(1)(a) of TMA 1970 (emphasis added).”
[12] Section 8(1)(a) TMA 1970 states as follows:
(1) For the purpose of establishing the amounts in which a person is chargeable to income tax and capital gains tax for a year of assessment, and the amount payable by him by way of income tax for that year, he may be required by a notice given to him by an officer of the Board –
- to make and deliver to the officer, a return containing such information as may reasonably be required in pursuance of the notice …
[13] When considering the validity of a penalty assessment and notification I need to consider whether a notice to file under section 8(1)(a) TMA 1970 has been lawfully given to the appellant by an officer of the Board (see Lennon [2018] TC 06453) at [21–40].
[14] If no valid notice to file has been lawfully given then there can be no failure to make or deliver a return etc “under”section 8(1)(a) of TMA 1970 as is required by Schedule 55.
[15] If no valid notice to file has been lawfully given, then any return submitted by a taxpayer is a voluntary return. It has been held in the cases of Wood (Wood [2018] TC 06339) and Patel [2018] TC 06426 that where a voluntary return has been submitted but there has been no notice to file given to a taxpayer, there is no valid notice under section 8(1)(a). And so penalties (Wood) and the opening of an enquiry and its closure by a closure notice (Patel) were not valid.
[16] If no return has been given under section 8(1)(a) TMA 1970 in accordance with its terms, the provisions of section 1 TMA...
To continue reading
Request your trial
-
Hurst
...the late filing penalties were invalid. In response to HMRC's statement of case the appellant also relied on the similar cases of Groves [2018] TC 06541 and Lennon [2018] TC 06453. The FTT noted that similar conclusions to those in Goldsmith were reached in Griffiths [2018] TC 06697 and Man......
-
Hurst
...on by the appellant (and to which HMRC at the time did not object), namely Goldsmith [2018] TC 06284, Lennon [2018] TC 06453 and Groves [2018] TC 06541. The FTT took into account the contrary decision in Crawford [2018] TC 06594. The FTT concluded that in circumstances where an appellant re......
-
Higgins
...8 notice for its given purpose. The FTT agreed and adopted Judge Popplewell's analysis of the relevant law in Lennon and Groves (Groves [2018] TC 06541). The FTT agreed that an appellant may challenge the validity of a s. 8 notice during penalty proceedings and that such notice may only be ......