Khan
| Jurisdiction | UK Non-devolved |
| Judgment Date | 03 October 2017 |
| Neutral Citation | [2017] UKFTT 0731 (TC) ,[2017] UKFTT 731 (TC) |
| Date | 03 October 2017 |
| Court | First Tier Tribunal (Tax Chamber) |
[2017] UKFTT 0731 (TC)
Judge Harriet Morgan
Mr Razaq-Sidiq appeared for the appellant
Ms Esther Hickey, an officer of HM Revenue and Customs, appeared for the respondents (“HMRC”)
Procedure – Application to make a late appeal – Application refused.
[1] The hearing was to consider whether the appellant made an appeal against a number of determinations and assessments to income tax, VAT and penalties and surcharges within the applicable statutory time limits and, if not, whether the appellant may be permitted to bring an appeal outside those time limits.
[2] The appellant submitted a notice of appeal to the tribunal on 23 September 2016. In the notice it was stated that the total amount of tax, penalties and surcharges appealed against was £56,167.67. The appellant did not send the tribunal the particular determinations and assessments to which the specified amount related. In response to the tribunal's request for clarification as to the precise decisions the appellant wished to appeal against, on 5 December 2016, the appellant submitted details of a statutory demand from HMRC for payment of £56,167.67 and a “statement of liabilities” that HMRC prepared as at 19 February 2016.
[3] Following further requests for clarification from the tribunal, in a letter to the tribunal of 14 March 2017, HMRC set out details of their various decisions against which the appellant had a right of appeal. In summary, these comprised the following:
- For direct tax purposes:Assessments to income tax for the tax years 2007/08 to 2010/11 for a total of £18,562.24 in each case issued on 10 September 2012 (under s 29 of the Taxes Management Act 1970 (TMA) and s 9A and s 28A TMA).A penalty for the tax year 2007/08 of £588 issued on 29 25 August 2012 (under s 95(1)(a) TMA).Penalties for the tax years 2008/09 to 2010/11 of a total of £3,306 issued on 28 August 2012 (under Schedule 24 of the Finance Act 2007).Late payment penalties for the tax year 2010/11 of £681 issued on 20 November 2012, 23 April 2013 and 22 October 2013 (under Schedule 56 of the Finance Act 2009).Surcharges for late payment of tax due for the tax years 2007/08 to 2009/10 of a total of £1,400.48 issued on 29 November 2012 and 10 May 2013 (under s 59C TMA).
- For VAT purposes:Assessments for VAT due in respect of VAT accounting periods from 08/09 to 08/11 of £18,234 issued on 15 February 2012.VAT default surcharges of £573.65 in respect of the VAT accounting periods ending 08/08, 05/09, 08/09, 08/10 and 02/12.
I refer to all of the above together as “assessments”.
[4] In outline, the direct tax assessments were for income tax on additional income from the appellant carrying on a business in respect of the Archer public house and a cash and carry business. These were raised on the conclusion of an enquiry into the appellant's tax position for the tax year 2008/09. The penalties of £588 and £3,306 were for negligent or careless conduct in failing to declare the relevant income. It appears from the correspondence set out below that HMRC made these assessments on the basis that the appellant's overall expenditure exceeded his income from the two businesses, such that he must have had additional undeclared income from these businesses.
[5] As set out in a letter from HMRC to the appellant dated 15 February 2012, the VAT assessments were made on the basis that the appellant had not been declaring VAT on the income from the pub business since the VAT quarterly accounting period 08/09 onwards. HMRC understood that the appellant was still the official licensee for the pub and therefore income from running it should have been declared on his VAT returns under his VAT registration number 796 2103 19. The assessment was based on an average of the net VAT declared over the three years before the appellant stopped declaring income less VAT actually declared on the return for each relevant quarterly period. It appears the appellant was also using that VAT registration number to declare income from the separate cash and carry business as set out below.
[6] The tribunal accepts that the appeal is potentially made in respect of the assessments and determinations as set out in [3] above. However, the appellant can make an appeal only if an appeal was made within the applicable statutory time limits or the tribunal decides to allow an appeal to be made outside those limits.
[7] The appellant has a right of appeal against the direct tax assessments and related penalties listed in [3(1)(a) to (e)] above under s 31 TMA, s 100B TMA, s 15 and 16 of Schedule 24, Schedule 56 of the Finance Act 2009 and s 59C TMA respectively.
[8] The time limits and procedure for bringing an appeal is in each case governed by s 31A TMA. This provides that an appeal is required to be made to the relevant officer of HMRC who issued the closure notice or assessment or penalty determination within 30 days of the date on which the particular notice of assessment, determination or closure notice was issued.
[9] An appeal can be made to the tribunal only if an appeal is first made to HRMC. An appeal to the tribunal also has to be made within the initial 30 day period or, where HMRC are required or requested to undertake a review of the relevant decision, broadly, within 30 days of the conclusion of the review.
[10] Where a notice of appeal is given late, after the specified 30 day period, HMRC may agree to the appeal being made late or the tribunal may give permission for the appeal to be made late under s 49 TMA. This provides that where notice of appeal may be given to HMRC, but no notice is given before the relevant time limit (under s 49(1)), notice may be given after the relevant time limit if (a) HMRC agree, or (b) where HMRC do not agree, the tribunal gives permission (s 49(2)).
[11] It is further provided that HMRC shall agree to notice being given after the deadline where (a) the appellant has requested HMRC in writing to agree, (b) HMRC consider that there is a reasonable excuse for not giving the notice before the time limit and (c) HMRC are satisfied that the request was made without unreasonable delay after the reasonable excuse ceased (s 49(3) to (6) TMA).
[12] If the appeal is made late and HMRC do not agree to the appeal being made late but the tribunal decides it can be made to HMRC late, the appellant may then appeal to the tribunal (under s 49A) (subject to the outcome of any review by HMRC of their decision).
[13] In this case HMRC do not agree to the appeal being made late.
[14] As regards the VAT assessments and default surcharges, the appellant has a right of appeal to the tribunal under s 83 VATA.
- An appeal under that section must be made to the tribunal again within a 30 day period. The period is usually 30 days beginning with the date of the document in which HMRC notifies the decision to the taxpayer (s 83G VATA).
- That is subject to cases where HMRC are required or requested to undertake a review of the relevant decision, in which case, broadly, the appeal has to be made within 30 days of the conclusion of the review. The taxpayer usually has to request or accept such a review when offered within a 30 day time limit also.
- If a request for a review or acceptance of an offer of a review is not made to HMRC within the applicable 30 day time limit, HMRC must nevertheless review their decision if (a) the taxpayer applies for a late review in writing, (b) HMRC are satisfied that the person had a reasonable excuse for not accepting an offer of a review or requesting a review within the time limit and (c) HMRC are satisfied that the person made the late request without unreasonable delay after the excuse had ceased to apply (s 83E VATA). That is the case unless the person has appealed to the tribunal in respect of the decision.
- An appeal to the tribunal may be made after the end of the relevant 30 day period if the tribunal gives permission to do so (s 83G(6) VATA).
[15] In this case it appears that the appellant did not request a review of any of the VAT decisions or accept any offer of such a review within the applicable 30 day time limit.
[16] An appeal against a VAT assessment of this kind and default surcharges can be brought only if the amount which HMRC have determined or assessed to be payable as VAT has been paid or deposited with them (under ss 84(3) and 84(3A) VATA). However, where that is not the case an appeal “shall be entertained if – (a) HMRC are satisfied (on the application of the appellant), or (b) the tribunal decides (HMRC not being so satisfied and on the application of the appellant), that the requirement to pay or deposit the amount determined would cause the appellant to suffer hardship” (under s 84(3B) VATA).
[17] In this case the appellant had not paid the relevant VAT and, as explained below, in my view had not made an application to HMRC that he should not be required to pay the VAT on the grounds that doing so would cause him hardship.
[18] The appellant asserted that a hardship application had in fact been made to HMRC. In support of this, the appellant produced letters from his accountant, ABC Bookkeeping and Accountancy (“ABC”), to the HMRC local compliance team for small and medium enterprises. However, these relate to a request for time to pay the total tax debt HMRC assert is owed to them and were not addressed to the team at HMRC dealing with any appeal against the relevant assessments. In the first letter of 30 April 2017, ABC stated that it was not possible for the appellant to pay all the liability of £56,134.39 in one go. They said he could pay £150 per month and attached a schedule of his monthly income and expenses (but with no supporting documentation). This showed his total monthly income as £1,933.15 and monthly outgoings as £1769.17. They stated the appellant was willing to pay the full amount but needed to agree a payment plan...
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