Shaw
| Jurisdiction | UK Non-devolved |
| Judgment Date | 21 June 2018 |
| Neutral Citation | [2018] UKFTT 381 (TC) |
| Date | 21 June 2018 |
| Court | First Tier Tribunal (Tax Chamber) |
[2018] UKFTT 0381 (TC)
Judge Nigel Popplewell
Income tax – Individual tax return – Penalties for late filing – Whether properly imposed – No – No evidence that a valid notice to file under TMA 1970, s. 8(1) had been given to the taxpayer by an officer of the Board – Impact of digital communication – Appeal allowed.
The First-Tier Tribunal (FTT) found that a s. 8 TMA notice is still required even though the taxpayer is under digital communication with HMRC so the penalties were invalidated.
This was an appeal against the following penalties visited on the appellant (CS) by the respondents (or “HMRC”) under FA 2009, Sch. 55 for the late filing of an individual tax return for the tax year 2015–2016: A daily penalty of £900 (“daily penalty”) and a 6 month late filing penalty of £300 (“6 month penalty”).
CS had completed a self-assessment tax return for a number of years online every year since 2007–2008. CS opted in to HMRC's self-assessment digital service on 21 July 2016.
The respondents' computer records suggested that a “notice to file” was issued to CS on 6 April 2016 to his online tax account secure mail box. CS's electronic return for the year 2015–2016 was received by HMRC on 6 November 2017 and was processed on 7 November 2017. As the return was not received by the filing date, HMRC issued a notice of penalty assessment on or around 16 February 2017 for a late filing penalty of £100. As the return had still not been received 3 months after the penalty date, HMRC issued a notice of daily penalty assessment on 15 August 2017 for the daily penalty. As the return had still not been received 6 months after the penalty date, HMRC issued a notice of penalty assessment on 15 August 2017 for the 6 month penalty. CS paid £146 on 4 January 2017. This was allocated first to the daily penalty of £100, and was the reason why this appeal does not relate to that daily penalty.
The FTT summarised the legislation and law relating to the validity of the assessment and notification of penalties.
The penalties in this case have been assessed and notified on and to CS under Sch. 55. To come within the Sch. 55 penalty regime, a taxpayer must have failed to make or deliver a return, or to deliver any other document, The relevant return is a Return under TMA 1970, s. 8(1)(a). If no valid notice to file has been lawfully given then there could be no failure to make or deliver a return etc “under” TMA 1970, s. 8(1)(a), as was required by Sch. 55.
CS had opted into HMRC's self-assessment digital service. A taxpayer, once enrolled into this online service might file forms and returns online and see an overall picture of their tax, including payments they have made and amounts they owed. Where a taxpayer has opted for paperless contact HMRC would deliver the relevant document or notice to file a return digitally to their secure mailbox in their online account and at the same time an e-mail would be sent to the email address the customer provided to advise the customer to check their mailbox for new messages.
There was nothing that the FTT have come across either in the Statement of Case nor in the legislation which changed the legal requirement that a notice to file under TMA 1970, s. 8(1)(a) must be given by an officer of the Board.
HMRC provided various items of generic documentation but nothing that indicated the documents were sent from a particular officer.
It seemed that HMRC were perfectly capable of providing evidence of letters executed by either an unidentified officer or an identified officer. They have not done this in the case of the purported notice to file. HMRC might say that because two of the three letters clearly show that they were going to be signed (or were signed even though the copies were not) by either a named or unnamed HMRC officer the same must have been the case (or it was more likely than not that it was the case) for the purported notice to file. Even if the FTT had been asked by HMRC to find this simply including two letters in the bundle where an officer was identified as the signatory, with a suggestion that a third letter must therefore also have had an officer as the signatory, was taking the process of induction (or the presumption of regularity) too far. The FTT was being asked to speculate by HMRC that a notice to file was given to this appellant by an officer of the Board. The FTT was not prepared to so speculate. The FTT could not draw an inference that this was the case from the evidence that has been presented to them. The FTT found that no valid notice to file under TMA 1970, s. 8(1)(a) was given to CS by an officer of the Board. The fact that CS had opted into HMRC's digital service made no different to the analysis. The provisions of TMA 1970, s. 8(1)(a) applied to a notice to file whether it is given in person, via the post or digitally.
CS has not failed to deliver a return under TMA 1970, s. 8(1) TMA 1970 and so Sch. 55 was not engaged. The penalties were invalidly assessed. In these circumstances there was no need for the FTT to consider reasonable excuse, special circumstances or proportionality. In light of the above the FTT allowed this appeal.
The case followed a familiar pattern in that HMRC had applied penalties in...
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