Loial
| Jurisdiction | UK Non-devolved |
| Judgment Date | 13 March 2018 |
| Neutral Citation | [2018] UKFTT 138 (TC) |
| Date | 13 March 2018 |
| Court | First Tier Tribunal (Tax Chamber) |
[2018] UKFTT 0138 (TC)
Judge Geraint Jones Q. C., Mr. David Earle
The appellant appeared in person
Miss Gill Clissold, instructed by the General Counsel and Solicitor to HM Revenue and Customs, appeared for the respondents
Income tax – Self assessment – Late filing – Analysis of the required burden of proof in penalty cases and when inferences are permissible.
The FTT found that submitted evidence contained inconsistencies and HMRC's reliance on inferences did not amount to proof.
The case concerned itself with the requirement on the respondents, HMRC, to satisfy on the balance of probabilities that a Notice to File as required by TMA 1970, s. 8 was issued to the last known address of the taxpayer.
The Appellant appealed the late filing penalty imposed in respect of a self-assessment tax return for the year ended 5 April 2015. The grounds for appeal were that the Appellant did not receive any letter from the respondents prior to 13 June 2017 requiring the submission of a self-assessment tax return for that year.
Given the appeal was in respect of penalties, the appeal process required the right to a fair trial before an independent Court of Tribunal. The respondents bear the onus of proof to justify the imposition of a penalty. The Tribunal had to make its findings of fact based upon admissible evidence and not considering unsubstantiated assertions.
The Appellant had in their appeal set out factual matter in issue and therefore, the respondents had been on notice it would be incumbent upon them to prove the sending of the Notice to File. A notice to file must have been sent in accordance with TMA 1970, s. 115.
HMRC sought to rely upon a submitted document entitled “Return Summary 2014/15”. The document contained the words “Return Issued Date” alongside the date “06/04/2015” and it was contended that was proof, that a Notice to File was sent to the appellant on that date. The stated position was that it “would have been” sent because it is so recorded. It was suggested that the inference could be drawn that the Notice to File was:
- Sent on 6 April 2015,
- By post in a pre-paid envelope; and
- Addressed to the appellant's last known address.
The FTT found that no such inferences could be justified. The FTT referred to the cases of R v Alan Peter Ronald Hedgcock, David Charles James Dyer, Robert Mayers Court of Appeal Criminal Division [2007] EWCA Crim 3486 and Kwan Ping Bong v R [2007] EWCA Crim 3486 and Kwan Ping Bong v R [1979] AC 609, 615G which set out the requirements for drawing inferences from established primary facts. The requirement was that the inference must be compelling and that no reasonable man could fail to draw from the direct facts proved. The FTT concluded that the correct approach was to ask whether a reasonable jury, properly directed, would be entitled to draw an adverse inference.
Other inferences were available for consideration although the Respondents' submissions contained an inaccuracy or inconsistency. It was noted that a document stating “Base Address changed from 12 Rue Hector Berlioz” was at odds with the address history document. The FTT suggested that the error was that the word “from” should read “to”. If that were the case it may have suggested that a letter sent to the Appellant on 6 April 2015 was not sent to the last known address. The FTT noted it was not for them to speculate and the onus was on the Respondents to prove their case.
The FTT were not satisfied that the respondents had issued, on the balance of probabilities, a Notice to File as required by TMA 1970, s. 8, or to the last known address held on file by the respondents. The appeal was allowed in full.
A useful reminder of the evidence required to prove the imposition of a penalty and also that large organisations using automated systems are open to error.
[1] By her Notice of Appeal, filed online on 01 November 2017, the appellant, Mrs Loial, appeals against a penalty imposed upon her by the...
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Groves
...assessed and notified to the appellant and the appeal was allowed. Comment 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. DECISION Background [1] Th......
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Griffiths
...so goes further than drawing an inference and strays into speculation. This question arose in three other recent cases: Qureshi; Loial [2018] TC 06391; and Galiara [2018] TC 06431. In each case, HMRC had issued penalty notices for non-filing of an Individual Tax Return and the only relevant......
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Roeen
...to File was posted to that address. I appreciate that this conclusion differs from that reached in Qureshi [2018] TC 06372 and Loial [2018] TC 06391, both recent decisions of Judge Geraint Jones, quoted by the Appellant in his letter of 10 September 2018. Judge Jones was not satisfied, on s......