Owen
| Jurisdiction | UK Non-devolved |
| Judgment Date | 14 September 2021 |
| Neutral Citation | [2021] UKFTT 335 (TC) |
| Court | First Tier Tribunal (Tax Chamber) |
[2021] UKFTT 335 (TC)
Judge Jane Bailey
Income tax – Appellant failed to meet deadline for filing tax return – Whether reasonable excuse for the delay – No – Appellant failed to pay outstanding tax due by deadline for paying tax due – Whether reasonable excuse for delay – No – Appeal dismissed.
As this is a lengthy decision, I consider it appropriate to start by setting out, in bullet point form, the conclusions that have been reached. I have decided that:
- The late filing and late payment penalties imposed on Mr Owen for 2018/19 were imposed by HMRC in accordance with the relevant penalty legislation; and
- Mr Owen has not provided a reasonable excuse for his late filing of his tax return for 2018/19, nor has he provided a reasonable excuse for the late payment of the outstanding tax due from him for 2018/19;
In consequence:
- Mr Owen's appeal against the penalty of £100 for the late filing of his tax return for 2018/19 is dismissed;
- Mr Owen's appeal against the penalty of £49 for the 30 days late payment of the tax due for 2018/19 is dismissed; and
- Mr Owen's appeal against the penalty of £49 for the six months late payment of the tax due for 2018/19 is dismissed.
[1] This appeal by Mr Owen (the “Appellant”) is against HMRC's decision to issue him with three penalties. The first of those penalties, in the sum of £100, was imposed under paragraph 3 of Schedule 55 to the Finance Act 2009 (“FA 2009”) because HMRC took the view that the Appellant had not filed his tax return for the tax year 2018/19 on or before the statutory filing deadline for that return.
[2] The remaining two penalties were imposed under paragraphs 3(2) and 3(3) of Schedule 56 to FA 2009 because HMRC took the view that the Appellant had not paid all of the tax due for 2018/19 by the statutory payment deadline. These penalties are in the sum of £49 each.
[3] Therefore, the total penalties in dispute between the parties for the Tribunal to consider in this appeal amount to £198, consisting of one late filing penalty of £100, and two late payment penalties totalling £49.
[4] In his 14 May 2020 submissions to the Tribunal, the Appellant stated that his appeal is against all penalties incurred by him prior to June 2020. However, rule 20 of the Tribunal Procedure Rules requires an appellant to provide a written copy of the decision that is being challenged with his Notice of Appeal. The Appellant's Notice of Appeal to the Tribunal was accompanied by two pages of HMRC's letter of 23 December 2020, and a payment proof. Although HMRC's 23 December 2020 letter refers to the Appellant's dispute with HMRC regarding the tax years 2012/13 to 2017/18 (which are the subject of a separate appeal to the Tribunal with a 2020 reference), HMRC's letter of 23 December 2020 is a decision only in respect of the three penalties for 2018/19 set out above.
[5] Therefore, even though the three penalties set out above were all issued after June 2020, and despite the Appellant's statement that the appeal is in respect of penalties issued prior to June 2020, I conclude that the penalties covered by this decision are only the late filing penalty of £100 and two late payment penalties each in the sum of £49, all of which were issued for 2018/19.
[6] On the basis of the documents before me I make the following findings of fact:
- (a) During 2018/19, the Appellant was an employee, earning in excess of £50,000. During that tax year the Appellant's household received £993 in Child Benefit. As the Appellant earned in excess of £50,000 and was the highest paid earner in his household, the Appellant was liable to the High Income Child Benefit Charge in 2018/19.
- (b) On 10 October 2019, HMRC sent a letter to the Appellant that referred to the Appellant's liability to the High Income Child Benefit Charge (HICBC). The subsequent interactions between the Appellant and HMRC resulted in HMRC issuing the Appellant with section 29 assessments to tax for the years 2012/13 to 2017/18 to try to collect the HICBC due from the Appellant for those years. HMRC also issued the Appellant with penalties because the Appellant had failed to notify HMRC of his liability to the HICBC for those six years. The Appellant appealed to the Tribunal against those assessments and penalties, and that appeal (the 2020 appeal) is currently stayed pending the final determination of R & C Commrs v Wilkes [2021] BTC 530.
- (c) On 24 January 2020, HMRC registered the Appellant for Self Assessment. On 30 January 2020, HMRC issued the Appellant with a full tax return for 2018/19. This tax return included a statutory Notice to File. I am satisfied of the date of issue because a copy of the paper tax return completed by the Appellant has been provided in the documents bundle, and the date on which this document was issued is visible on the top left hand side of the front page.
- (d) The copy of the tax return in the documents bundle bears the Appellant's name and postal address, including postcode, on the top right hand side. I take judicial notice of the fact that HMRC's usual procedure is to post tax returns to taxpayers very shortly after issue. I am satisfied on the balance of probabilities that the tax return issued by HMRC was posted to the Appellant, in accordance with HMRC's usual procedure. (The date of receipt of that return by the Appellant is considered below.)
- (e) Legislation specifies the filing deadlines for tax returns (see further below). Half way down the front page of the tax return issued to the Appellant, on the left hand side, is a box with the headline Deadlines. The text under that headline begins:We must receive your tax return by these dates:If you're using a paper return – by 31 October 2019 (or three months after the date of this notice if that's later)If you're filing a return online – by 31 January 2020 (or three months after the date of this notice if that's later)
- (f) The date that is three months from the date of the tax return issued to the Appellant was 30 April 2020. As that date is later than either 31 October 2019 or 31 January 2020, 30 April 2020 was the date specified on the front of the return as the deadline for it to be received back by HMRC. By concession, HMRC allow a further seven days for a tax return to be received by a taxpayer. In the documents bundle is a print of HMRC's electronic SA Return Summary for 2018/19. That document shows that HMRC understood the filing deadline for a paper return to be 6 May 2020.
- (g) On 23 July 2020, HMRC issued a late filing penalty of £100 to the Appellant because the deadline for the Appellant to file a tax return for 2018/19 had passed and HMRC had yet to receive a tax return for this year. I am satisfied that notice of this penalty was posted to the Appellant at his postal address, and that it was received by him in the ordinary course of post.
- (h) On 4 August 2020, the Appellant appealed to HMRC against this late filing penalty. The Appellant's grounds of appeal to HMRC were:The requirement to complete self assessment arises from HMRC's own errors highlighted in Tax Tribunal case TC/2020/01953. As such any penalties imposed fall within the scope of that appeal where I have detailed the difficulties from attempting to subvert the appeals process like this. In addition, the statutory deadline had already passed when this notice was received from HMRC.
- (i) As set out above, the 2020 appeal does not concern the tax year 2018/19 and it does not include the penalties under consideration here.
- (j) In his appeal to HMRC the Appellant did not specify the date on which he did receive the 2018/19 tax return issued by HMRC. The Appellant also did not make clear, when he referred to the statutory deadline, whether he meant that he did not receive the tax return by 31 October 2019 (the deadline for filing a paper tax return if the return had been issued by 31 July 2019), by 31 January 2020 (the deadline for filing a return online if the return had been issued by 31 October 2019) or by 30 April 2020 (the statutory filing deadline in this case). The tax return must have been received by 4 August 2020, when the Appellant submitted his appeal to HMRC as he referred to his receipt of that return in his appeal. In his 14 May 2021 submissions to the Tribunal the Appellant argued that he was not notified until June 2020 that he was liable to complete Self Assessment tax returns.
- (k) I have found that HMRC posted the 2018/19 tax return, containing the Notice to File, to the Appellant. Section 7 of the Interpretation Act 1978 provides:Where an Act authorises or requires any document to be served by post (whether the expression serve or the expression give or send or any other expression is used) then, unless the contrary intention appears, the service is deemed to be effected by properly addressing, pre-paying and posting a letter containing the document and, unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post.
- (l) Therefore, the onus is now on the Appellant to demonstrate the contrary, i.e., that the Notice to File was not received in the ordinary course of post. It is possible, although extremely rare, for post to be lost for several months in the postal system but then ultimately delivered very late. It is more likely, though still rare, for items of post to be completely lost in the postal system and not delivered at all. The Appellant has not referred to any other post from HMRC being delivered several months late. The dates on which the Appellant appealed against the penalties issued are both within three weeks of the date of the penalty notices having been issued by HMRC (and so those penalty notices are more likely than not to have been received in the ordinary course of post). The Appellant also received HMRC's...
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