Marfo
| Jurisdiction | UK Non-devolved |
| Judgment Date | 19 August 2022 |
| Neutral Citation | [2022] UKFTT 289 (TC) |
| Year | 2022 |
| Court | First Tier Tribunal (Tax Chamber) |
[2022] UKFTT 289 (TC)
Judge Malcolm Frost
High income child benefit charge – Permission to make a late appeal – Strength of underlying case – Martland applied – Permission granted – ITEPA 2003, Pt. 10, Ch. 8 – TMA 1970, s. 29, 31A and 49.
In Marfo [2022] TC 08571, the First-tier Tribunal (FTT) granted permission for a taxpayer to make a late appeal against assessments issued by HMRC in respect of the high income child benefit charge (HICBC).
On 9 December 2019, HMRC issued assessments to the appellant (Ms Marfo) for amounts in respect of the HICBC for 2016–17 and 2017–18. The assessments were purportedly issued under the discovery provisions in TMA 1970, s. 29.
On 23 November 2020, Ms Marfo appealed against the assessments, but as the appeal should have been made by 8 January 2020, HMRC refused to accept the appeal. Ms Marfo appealed to the FTT to permit her to notify her appeal to HMRC late.
The FTT considered the application using the three-stage test set out in Martland v R & C Commrs [2018] BTC 525. In doing so it found as follows.
- The delay was serious and significant.
- Ms Marfo not initially putting her mind to considering an appeal did not provide a satisfactory reason for the delay and neither did difficulties caused by the COVID-19 pandemic.
- Considering all the circumstances of the case, and in particular the strength of Ms Marfo’s underlying case, given that:in R & C Commrs v Wilkes [2021] BTC 530, the Upper Tribunal (UT) decided that HMRC may not assess the HICBC by means of a discovery assessment as such an assessment would not be in respect of income; and the changes to discovery assessments introduced by FA 2022, s. 97, which would nullify the effect of Wilkes retrospectively, did not apply because Ms Marfo’s appeal was made before 30 June 2021 and had been stayed behind the Wilkes case before 27 October 2021 (although the stay had since been lifted);favoured allowing the appeal to be notified late.
The FTT also considered staying the application pending the outcome of the Court of Appeal’s decision in Wilkes but did not consider it appropriate.
Accordingly, the FTT allowed Ms Marfo’s application and granted her permission to notify her appeal to HMRC late.
While the FTT did not find the reasons for the taxpayer’s delay to be particularly compelling, given the similarities of the case to Wilkes, in which the UT had decided that discovery assessments could not be used to assess the HICBC, and that retrospective legislation reversing this view could not apply to this case, it allowed the appeal to be made late. If the substantive case comes back to the FTT, its decision may depend on whether it is heard before or after the Court of Appeal hears the Wilkes appeal and whether or not that upholds the UT decision.
Comment by Meg Wilson, Lead Technical Writer at Croner-i.
Ms Marfo represented herself appeared for the appellant.
Anika Aziz, litigator of HM Revenue and Customs' Solicitor's Office appeared for the respondents.
[1] This is an application for permission to notify an appeal to HMRC outside the prescribed 30-day time limit. For the reasons set out below, the application succeeds and permission is granted.
[2] With the consent of the parties, the form of the hearing was V (video). Prior notice of the hearing had been published on the gov.uk website, with information about how representatives of the media or members of the public could apply to join the hearing remotely in order to observe the proceedings. As such, the hearing was held in public.
[3] We were referred to a bundle of documents consisting of 231 pages, and we heard evidence from Ms Marfo.
[4] The substantive issue between the parties relates to the High-Income Child Benefit Charge (“HICBC”) introduced by s 8 and Schedule 1 Finance Act 2012. Under those provisions, if a taxpayer or their partner had an adjusted net income that exceeded £50,000 for a tax year, they would potentially be liable for a tax charge that effectively claws back child benefit received in that year. The tax charge claws back the benefit in full if the level of income is at least £60,000 or on a sliding scale if it is between £50,000 and £60,000.
[5] During the tax years ending 5 April 2017 and 2018 Ms Marfo claimed and received child benefit.
[6] On or about 12 October 2019 HMRC sent a letter to Ms Marfo drawing her attention to the possibility that she might be liable to the HICBC.
[7] Ms Marfo telephoned HMRC on 11 November 2019 in order to seek more information. After speaking to an advisor, she understood that she was liable to the HICBC in the years ending 5 April 2017 through to 2019.
[8] HMRC proceeded to issue assessments dated 9 December 2019 for amounts in respect of HICBC for tax years ending 5 April 2017 and 2018 (the “Disputed Assessments”). An amount of £1,788 was assessed in respect of each year. The Disputed Assessments were stated to have been made under s 29 of the Taxes Management Act 1970 (“TMA”).
[9] Each of the Disputed Assessments contained a section entitled “What to do if you disagree”, the material part of which reads “If you disagree with this notice of assessment, you can appeal. To do this, you need to write to us within 30 days of the date of this assessment, telling us why you think our decision was wrong”.
[10] The Disputed Assessments were also accompanied by factsheets relating to penalties, which refer to appeal rights and to a 30-day deadline for an appeal.
[11] Ms Marfo agreed a payment plan for the HICBC liability, confirmed by letter from HMRC dated 7 February 2020. The payment plan was in relation to an outstanding debt of £4,998.90. This figure appears to consist of the amounts assessed by the Disputed Assessments, along with interest and other amounts not the subject of the present application.
[12] HMRC's records show that on 27 February 2020 Ms Marfo spoke to an HMRC advisor on the telephone in relation to late payment penalties in connection with the payment plan. She was advised that she could bring an appeal once the payment plan was complete. This advice was confirmed by a letter from HMRC dated 28 February 2020.
[13] HMRC's records further show that on 5 November 2020 Ms Marfo spoke with an HMRC advisor on the telephone in connections with penalties relating to the payment plan and disputed interest. The appeal process was explained to her.
[14] On 23 November 2020, Ms Marfo appealed to HMRC by completing and submitting a paper form entitled “Self Assessment: Appeal against penalties for late filing and late payment”. In spite of the title of the form, it was clear that Ms Marfo's appeal was not limited to penalties and related to the substantive liability. The appeal form was accompanied by a letter dated 22 November 2020 setting out Ms Marfo's reasons for appeal.
[15] The appeal appears to range slightly wider than the Disputed Assessments. The letter seeks to dispute late payment penalty charges and the HICBC “for the period of 2016 up to the point notified by HMRC (Nov 2019)”. This would accordingly include tax years falling after the years covered by the Disputed Assessments. As HMRC's refusal to accept a late appeal relates solely to the Disputed Assessments, (and, pursuant to s 49(2)(b) TMA, the Tribunal can only be asked to give permission where HMRC do not agree) we consider that any matters not relating to those assessments fall outside the scope of the present application and remain with HMRC.
[16] By a letter dated 27 April 2021, HMRC refused to accept an appeal in relation to the Disputed Assessments. This was on the grounds that the deadline to submit an appeal was 8 January 2020, and that therefore the “letter of 20 November 2020” (presumably intended to refer to 22 November 2020) was too late to be accepted.
[17] On 03 May 2021, the Appellant submitted an appeal to the Tribunal.
[18] The case had previously...
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