Rowledge
| Jurisdiction | UK Non-devolved |
| Judgment Date | 05 August 2016 |
| Neutral Citation | [2016] UKFTT 556 (TC) |
| Date | 05 August 2016 |
| Court | First Tier Tribunal (Tax Chamber) |
Judge Thomas Scott
Ms Sally Hutchings of Morrisons Solicitors LLP appeared for the appellant
Ms Beverley Levy, HM Revenue and Customs Solicitor's Office, appeared for the respondents
Capital gains tax assessment – Application for permission to appeal out of time – Data Select Ltd v R & C Commrs [2012] BVC 1,743 criteria applied – BPP Holdings Ltd v R & C Commrs [2016] BVC 9 considered – Application granted.
The Appellant's applied for permission to appeal an assessment made by HMRC out of time concerning the Capital Gains Tax (CGT) and related penalty on the sale of a property. The Tribunal in applying case law relating to the reasonableness of granting an extension and applying Tribunal rules on acting fairly and justly, including avoiding delay decided to allow the appeal to be heard.
The Appellant, Ms Rowledge, applied to the Tribunal for permission to make a late appeal in relation to an assessment to capital gains tax for 2007–08. HMRC objected to the application.
The only issue was whether leave should be granted for an appeal out of time. The substantive issues relating to the assessment would be considered if leave to appeal was granted.
The key dates were as follows:
The appellant had purchased a property in 2005 and transferred it to her brother who had paid her for the property.
On 11 February 2013 HMRC wrote to Ms Rowledge notifying her that they were carrying out a check of her tax position in relation to the sale of the Property.
On 19 March 2013 HMRC issued an information notice to Ms Rowledge under Finance Act 2008 (FA 2008), Sch. 36, para. 1. Ms Rowledge says that she did not receive this notice.
On 7 May 2013 HMRC issued a penalty notice under Sch. 36. Ms Rowledge says that she did not receive this notice.
On 8 July 2013 HMRC issued a notice of assessment to CGT for the year ended April 2008 under the Taxes Management Act 1970 (TMA 1970), s. 29 and a penalty determination under TMA 1970, s. 7(8) (the Assessment).
On 15 November 2014 Ms Rowledge wrote to HMRC asking them to review the situation as the property sale to Peter did not generate a profit and in turn I believe that capital gains tax is not due on this transfer of legal title of the property. In any event the property is/was a principal residence.
On 12 January 2015 HMRC replied stating that their enquiry had been closed on 8 August 2013 and that the time limit for appealing against the Assessment had expired 30 days after it was sent (on 8 July 2013). The letter stated that since Ms Rowledge had not given any reasonable excuse, a late appeal could not be considered.
Following other correspondence and telephone calls, on 29 June 2015 Ms Rowledge wrote to HMRC, broadly repeating the arguments in her letter of 15 November 2014 as to why no CGT was due.
On 21 March 2016, WSM Partners LLP, as agents for Ms Rowledge, filed a notice of appeal against the Assessment with the Tribunal.
The Tribunal stated that the decision is a balancing exercise and in reaching a conclusion the tribunal should be guided by the overriding objective of the Tribunal Rules to deal with cases fairly and justly, including avoiding delay.
The following case was discussed:
Morgan J in Data Select Ltd v R & C Commrs VAT[2012] BVC 1,743, at [34]: Applications for extensions of time limits of various kinds are commonplace and the approach to be adopted is well established. As a general rule, when a court or tribunal is asked to extend a relevant time limit, the court or tribunal asks itself the following questions: (1) what is the purpose of the time limit? (2) how long was the delay? (3) is there a good explanation for the delay? (4) what will be the consequences for the parties of an extension of time? and (5) what will be the consequences for the parties of a refusal to extend time? The court or tribunal then makes its decision in the light of the answers to those questions.
The Tribunal looked at these tests and found that although the delay was long in this case there were good reasons for the delay including ill health of the appellant and her brother.
In terms of the consequences the Tribunal found that a failure to allow this appeal could result in prejudice to HMRC as they had closed the case file but it would be far more prejudicial for the appellant to deny the appeal as she had spent considerable amounts in improving the property and therefore reducing the potential CGT liability significantly.
Therefore, when applying the test in Data Select and being guided by the overriding objective mentioned earlier, the Tribunal allowed the appeal.
The Tribunal here have made an equitable decision to permit an appeal made out of time based on the subjective analysis of the fairness in doing so...
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...Denton v TH White Ltd [2014] EWCA Civ 906, [2014] 1 WLR 3926 (Denton) B Fairall Ltd (in liquidation) [2010] TC 00592 (Fairall) Rowledge [2016] TC 05305 (Rowledge) Data Select Ltd v R & C Commrs [2012] BVC 1,743 (Data Select) Mitchell v News Group Newspapers Ltd [2013] EWCA Civ 1537, [2014] ......