Raftopoulou v Revenue and Customs Commissioners
| Jurisdiction | UK Non-devolved |
| Judgment Date | 16 October 2015 |
| Neutral Citation | [2015] UKUT 579 (TCC) |
| Date | 16 October 2015 |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
Judge Roger Berner, Judge Swami Raghavan
Michael Thomas, counsel, instructed by the Bar Pro Bono Unit appeared for the Appellant
Christopher Stone, counsel, instructed by the General Counsel and Solicitor to HM Revenue and Customs, appeared for the Respondents
Income tax Whether deeming provision in the Taxes Management Act 1970 (TMA 1970), s. 118(2) could apply to deem out of time claim for repayment of income tax under TMA 1970, Sch. 1AB to have been in time where taxpayer had reasonable excuse Yes Whether tribunal had jurisdiction to hear the issue of whether claim out of time Yes Whether provisions on notices of enquiry and closure notices in TMA 1970, Sch. 1A enabled notice of enquiry and closure to be issued in immediate succession and in one document Yes Upper Tribunal decision in Portland Gas Storage Ltd v R & C Commrs [2014] BTC 520 considered Appeal allowed.
The Upper Tribunal (UT) set aside a First-tier Tribunal (FTT) decision (Raftopoulou TAX[2014] TC 03935) that an appeal against HMRC's refusal to allow a taxpayer's claim for overpayment relief should be struck out on the grounds that it had no jurisdiction. The UT concluded that the FTT erred in law in failing to consider whether the taxpayer had a reasonable excuse for the late submission of her claim, and on that basis whether the FTT had jurisdiction. The UT remitted the case back to the FTT for reconsideration and to determine the application afresh.
The appellant (Dr Raftopoulou) submitted her 200607 self-assessment tax return on 14 January 2008. Based on the figures in the return, a tax liability of approximately 18,000 arose. Dr Raftopoulou believed the amount of tax due was the result of a mistake, however, she did not amend her return, as she could have under TMA 1970, s. 9ZA up to 31 January 2009, but instead on 13 October 2011 made a claim for repayment pursuant to TMA 1970, Sch. 1AB.
In a letter dated 9 November 2011, HMRC refused Dr Raftopoulou's claim for overpayment relief on the basis that it was not made within the time limit contained in TMA 1970, Sch. 1AB, para. 3(1).
Dr Raftopoulou appealed HMRC's decision and HMRC applied to have the appeal struck out on the ground that her claim for overpayment relief was made out of time. The FTT noted that the claim was made outside the statutory four-year time limit in TMA 1970, Sch. 1AB, para. 3(1) and found that in the absence of a statutory provision to extend or appeal against the time limit the claim did not fall with the FTT's jurisdiction. The FTT accordingly struck out the appeal.
Dr Raftopoulou was granted permission to appeal to the UT on the ground that the FTT erred in not having regard to the possible application of TMA 1970, s. 118(2). Dr Raftopoulou argued that the FTT had jurisdiction in respect of her appeal if she was able to show, by application of s. 118(2), that she had a reasonable excuse for not having made the claim within the four-year time limit, and that she made the claim without unreasonable delay after the reasonable excuse had ceased.
The UT considered:
1) Whether the FTT had jurisdiction to hear the issue of whether the claim was out of time. HMRC argued that such a claim fell outside the statutory regime of enquiries, closure notices and appeals, such that an appeal to the FTT was precluded. Dr Raftopoulou submitted that the FTT did have jurisdiction in the form of an appeal against a closure notice. She argued that the correspondence between HMRC and herself could be construed as HMRC having opened an enquiry into the repayment claim and having issued a closure notice, which then gave rise to a right to appeal to the FTT.
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2) In relation to the failure of Dr Raftopoulou to make the claim within the period allowed by the statute:
a) whether TMA 1970, s. 118(2) applies to claims under TMA 1970, Sch. 1AB which are voluntary acts of the taxpayer; and
b) if so, whether the effect of the application of TMA 1970, s. 118(2) is that such a claim that was made out of time is to be deemed as having been made in time for the purpose of Sch. 1AB.
It was accepted by both parties that for the FTT to have jurisdiction on an appeal under TMA 1970, Sch. 1A the following matters were required in the following sequence: (1) a claim within the meaning of TMA 1970, Sch. 1A; (2) an enquiry by HMRC into the claim; (3) a closure notice in respect of the enquiry; and (4) an appeal in time against the closure notice, and in this appeal each of these elements was in dispute.
Whether there was a valid claim within the meaning of TMA 1970, Sch. 1A required the UT to look at whether TMA 1970, s. 118(2) could apply in principle, which further required the UT to look at the construction of both TMA 1970, s. 118(2) and TMA 1970, Sch. 1AB. The UT concluded that the second limb of TMA 1970, s. 118(2) did apply to a late claim for overpayment relief (and not just to compulsory acts within TMA 1970, as asserted by HMRC). Therefore if the taxpayer had a reasonable excuse for not filing such a claim within the time limit, and had made the claim without unreasonable delay after the excuse ceased, then TMA 1970, s. 118(2) deemed the taxpayer not to have failed to comply with the time limit and therefore deemed the claim that had been filed to have been filed within the relevant time limit. Such a claim would as a consequence be a claim under TMA 1970, Sch. 1AB, and accordingly would be a claim within the scope of TMA 1970, Sch. 1A, and subject to the provisions of that Schedule in relation to enquiries, closure notices and appeals.
The issues of whether HMRC opened an enquiry and issued a closure notice were only relevant if the FTT found that Dr Raftopoulou had a reasonable excuse for the failure to make the claim, however the UT decided that it was right to determine them. The UT referred extensively to the UT decision in Portland Gas Storage Ltd v R & C Commrs TAX[2014] BTC 520, although not agreeing with it that if all the relevant information was contained in the claim itself, the conclusion drawn by HMRC from that information would not be the result of any enquiry on their part. The UT concluded that the letter of 9 November 2011 was both a notice by HMRC under TMA 1970, Sch. 1A, para. 5 of the intention to enquire into the claim and a closure notice under TMA 1970, Sch. 1A, para. 7.
The UT concluded that the FTT erred in law in failing to consider whether Dr Raftopoulou had a reasonable excuse for the late submission of her claim, and on that basis whether the FTT had jurisdiction. The UT remitted the case back to the FTT for reconsideration and to determine the application afresh.
Dr Raftopoulou's pro bono representative made a prospective application for costs. The UT decided that it would hear further argument on the question as it was unsure whether it could order pro bono costs.
Given the potential significance of the correct legal interpretation of TMA 1970, s. 118(2), Sch. 1A and Sch. 1AB, it is extremely helpful that the taxpayer was able to obtain pro bono representation from Michael Thomas, on instruction by the Bar Pro Bono Unit following assistance from the Revenue Bar Association.
[1] This is the appeal of Dr Vasiliki Raftopoulou against the decision of the First-tier Tribunal (FTT) (Judge John Brooks) dated 20 August 2014 (Raftopoulou TAX[2014] TC 03935) striking out her appeal. Dr Raftopoulou had appealed in relation to her claim on 13 October 2011 for repayment of overpaid income tax for the tax year 200607. HMRC applied to have the appeal struck out on the ground that it was made out of time. The FTT noted that the claim was made outside the statutory four-year time limit and found that in the absence of a statutory provision to extend or appeal against the time limit the claim did not fall with the FTT's jurisdiction.
[2] Permission to appeal was granted by this Tribunal on the single ground that the FTT erred in not having regard to the possible application of s 118(2) of the Taxes Management Act 1970 (TMA). Dr Raftopoulou argues, contrary to HMRC's position, that the FTT has jurisdiction in respect of her appeal if she is able to show, by application of s 118(2), that she had a reasonable excuse for not having made the claim within the four-year time limit, and that she made the claim without unreasonable delay after the reasonable excuse had ceased.
[3] While HMRC were represented by counsel, Mr Stone, Dr Raftopoulou was representing herself until shortly before the hearing it became possible for her to secure pro bono representation by Mr Thomas who was instructed by the Bar Pro Bono Unit following assistance from the Revenue Bar Association. We are most grateful to Mr Thomas; the issues in this appeal concerned matters of legal interpretation and technical arguments on the FTT's jurisdiction and we derived a great deal of benefit from having the opportunity of hearing the considered legal submissions of both parties.
[4] 4. The facts found by the FTT are recorded in [7][8] of the Decision and are not disputed. That said, however, and having regard to the submissions we have received, we need to refer in a little more detail to the factual background of the refusal by HMRC of Dr Raftopoulou's claim.
[5] Dr Raftopoulou submitted her 200607 self-assessment return on 14 January 2008. On the figures stated in the return, a liability to tax of about 18,000 arose. Dr Raftopoulou believed the amount of tax due was the result of a mistake. However, Dr Raftopoulou did not amend her return, as she would have been entitled to do under s 9ZA TMA up to 31 January 2009, but instead on 13 October 2011 made a claim for repayment pursuant to Schedule 1AB TMA.
[6] Although the FTT did not refer to it, we were shown a copy of a letter dated 22 November 2008 from Dr Raftopoulou addressed to the HMRC office at...
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Dugan
...where the time limit was one that related to an obligation on a person, eg to send in a tax return. But in Raftopoulou v R & C Commrs TAX[2015] BTC 532 (Raftopolou) the Upper Tribunal (Judges Berner and Raghavan) decided that s 118(2) TMA applied to a case where the time limit related to a ......
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...rule 38 of the Tribunal Rules. The basis for her application was the decision of the Upper Tribunal in Raftopoulou v R & C Commrs TAX[2015] BTC 532 (“Raftopoulou”) where it was held that a claim for repayment of tax was something “required to be done” for the purposes of sub-section 118(2) ......
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