Priory London Ltd v R & C Commissioners and R & C Commissioners
| Jurisdiction | UK Non-devolved |
| Judgment Date | 12 August 2022 |
| Neutral Citation | [2022] UKUT 225 (TCC) |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
[2022] UKUT 225 (TCC)
Mr Justice Zacaroli, Judge Phyllisramshaw
Upper Tribunal (Tax and Chancery Chamber)
Annual Tax on Enveloped Dwellings (ATED) – Late filing of returns – Daily penalties – Whether date specified in penalty notice from which a daily penalty is payable can be prior to the date the notice is issued – Yes – HMRC appeal allowed – Taxpayer appeal dismissed – FA 2009, Sch. 55, para. 4.
In Priory London Ltd v R & C Commrs and R & C Commrs v Jocoguma Properties Ltd [2022] BTC 527, the Upper Tribunal (UT) upheld the First-tier Tribunal (FTT) decision in Priory London Ltd [2021] TC 08225 and overturned the FTT decision in Jocoguma Properties Ltd [2021] TC 08007, deciding that a notice for a daily late filing penalty in respect of a late ATED return can be given retrospectively.
Priory London Ltd and Jocoguma Properties Ltd (‘the companies’) were late filing ATED returns. As the returns were more than three months late HMRC decided to charge the companies a daily late filing penalty under FA 2009, Sch. 55, para. 4. Both companies were charged the maximum £10 per day for 90 days.
One of the requirements for validly charging a daily late filing penalty is that HMRC must give notice to the person in default specifying the date from which the penalty is payable (para. 4(1)(c)). In both cases the notice specifying the date from which the penalty was payable was issued after the end of the 90 day penalty period and after the returns had been filed.
The companies appealed against the penalties.
In Jocoguma Properties Ltd [2021] TC 08007, the FTT allowed the company’s appeal against the daily late filing penalty on the basis that a notice under para. 4(1)(c) could not be given retrospectively. The FTT’s decision followed that of Judge Poon in Heacham Holidays Ltd [2020] TC 07883 (‘Heacham’) and Advantage Business Finance Ltd [2019] TC 06926 (‘ABF’), in which Judge Poon considered the purpose of a para. 4(1)(c) notice is to warn the taxpayer in advance of the risk of incurring daily penalties. She considered that her conclusion was supported by the decisions of the UT and Court of Appeal (CA) in R & C Commrs v Donaldson [2014] BTC 531 and Donaldson v R & C Commrs [2016] BTC 28.
In Priory London Ltd [2021] TC 08225, the FTT dismissed the company’s appeal against the daily late filing penalty, concluding that Heacham and ABF had been wrongly decided. Contrary to Judge Poon’s view, Judge Chapman decided that Donaldson provided binding authority that a valid para. 4(1)(c) notice can be given retrospectively.
HMRC appealed against the Jocoguma decision and Priory appealed the FTT’s decision in its case.
The UT decided that the FTT in Priory had been correct and that in Jocoguma it had reached the wrong conclusion because the Heacham and ABF decisions had themselves been decided wrongly.
The UT considered that Judge Poon had been wrong to conclude that the purpose of a notice under para. 4(1)(c) is to warn the taxpayer in advance of the risk of incurring daily penalties. Reading para. 4(1)(c) together with the whole of para. 4, in particular para. 4(3), which says that the date specified in a para. 4(1)(c) notice ‘may be earlier than the date on which the notice is given’, the UT did not see how this could be read other than to permit the notice to be given retrospectively. Also the Donaldson decision had to be read in the context of the decision as a whole, the arguments being addressed to the UT and the fact that it related to a tax in respect of which HMRC did have advance notice of the taxpayer’s obligation to file a return.
The UT agreed with the conclusions reached by the UT in Donaldson. A notice under para. 4(1)(c) can be given retrospectively in all cases. It also noted that there was nothing in the CA decision in Donaldson which detracted from that conclusion.
This is an unsurprising decision, as if a notice for a daily late filing penalty cannot be given retrospectively, HMRC would not be able to charge a daily penalty under the harmonised rules in FA 2009, Sch. 55 for a return for any tax they do not know about until a return is received. In addition to ATED, as considered in this case, it would also apply to inheritance tax and stamp duty land tax (although the harmonised late filing penalty regime has not yet been implemented for these taxes).
This decision means that in addition to the Jocoguma FTT decision, the UT considers that the following FTT decisions were wrongly decided:
- Advantage Business Finance Ltd [2019] TC 06926
- Heacham Holidays Ltd [2020] TC 07883
- D & G Thames Ditton Ltd [2021] TC 07961
- Bennedy’s Developments Ltd [2021] TC 08008
Comment by Meg Wilson, Lead Technical Writer at Croner-i.
Priory London Limited was unrepresented at the hearing, but written submissions were received on its behalf from Mr Michael Dawson
Mr Joshua Carey, instructed by the General Counsel and Solicitor to HM Revenue and Customs, for HMRC (the respondents in Priory; the appellants in Jocoguma)
Mr Conor Kennedy, director, on behalf of Jocoguma Properties Limited
[1] The issue in these two appeals, which were heard together, is whether the date to be specified in a notice under paragraph 4(1)(c) of Schedule 55 to the Finance Act 2009 (“FA 09”) from which a daily penalty under paragraph 4(1) is payable, can be a date prior to the date the notice is issued by HMRC.
[2] The salient facts in each appeal can be shortly stated.
[3] In the appeal by Priory London Limited (“Priory”), the penalties imposed by HMRC were for the late filing of Annual Tax on Enveloped Dwellings (“ATED”) returns. These related to several dwellings. Priory was required to file ATED returns for each of the dwellings for the chargeable periods 2013/2014 and 2014/15. The returns for the first period were due on 1 October 2013. The returns for the second period were due on 30 April 2014. In respect of both periods, the returns were filed on 7 April 2017. No tax was due under these ATED returns.
[4] HMRC issued penalty notices for each property. For example, in respect of one of the properties (2a Grove End Road, London) HMRC issued a notice dated 13 October 2017, imposing a fixed penalty of £100 pursuant to paragraph 3 of Schedule 55 FA 09. In the same notice HMRC stated: “if your tax return is more than three months late we will charge you a penalty of £10 for each day it remained outstanding for a maximum of 90 days starting from 2 January 2014”. By a notice dated 19 January 2018, HMRC imposed further penalties totalling £1500 in respect of the same property. This comprised: (1) a daily penalty under paragraph 4 of Schedule 55 FA 09 in the maximum sum of £900, on the basis that the return was not filed for the full period of 90 days from 2 January 2014 to 1 April 2014; (2) a further fixed penalty of £300 under paragraph 5 of Schedule 55 FA 09, because the return was over 6 months late; and (3) a further fixed penalty of £300 under paragraph 6 of Schedule 55 FA 09 because the return was over 12 months late.
[5] In the appeal relating to Jocoguma Properties Ltd (“Jocoguma”), the penalties imposed by HMRC were also for the late filing of an ATED return. This related to the year ended 31 March 2019, and the return should have been filed on 30 April 2018, but was...
To continue reading
Request your trial
-
Priory London Limited v The Commissioners for HM Revenue and Customs and The Commissioners for HM Revenue and Customs v Jocoguma Properties Limited [2022] UKUT 00225 (TCC)
...citation number: [2022] UKUT 00225 (TCC) UT (Tax & Chancery) Case Numbers: UT-2021-000104 UT-2021-000199 Upper (Tax and Chancery Chamber) Hearing venue: The Rolls Building, Fetter Lane, London EC4A 1NL Heard on: 12 July 2022 Judgment date: 12 August 2022 Annual Tax on Enveloped Dwellings - ......