Smith
| Jurisdiction | UK Non-devolved |
| Judgment Date | 22 June 2018 |
| Neutral Citation | [2018] UKFTT 461 (TC) |
| Date | 22 June 2018 |
| Court | First Tier Tribunal (Tax Chamber) |
[2018] UKFTT 0461 (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 – Appeal allowed.
The First-tier Tribunal (FTT) allowed an appeal by the taxpayer against penalties issued by HMRC under Sch. 55, FA 2009 for late filing of his 2013/14 tax return on the basis that no notice to file had been given by an officer of HMRC.
The Appellant (Mr Paul Smith) submitted a paper tax return in respect of 2013/14 on 9 December 2016 or 25 months after a paper return was due. As the return was not received by the filing date, HMRC issued a late filing penalty on or around 18 February 2015, daily penalties three months after the penalty date, a six-month penalty and a twelve-month penalty. The total penalties amounted to £1,600.
Mr Smith had submitted his appeals against all penalties vastly out of time (two and a half years after the late filing penalty) but the FTT – having carried out a balancing exercise – decided that the prejudice for the Appellant if the appeal was not allowed to proceed was greater than it would be for HMRC if the appeal continued.
In looking at the merits of the penalties, the FTT considered the relevant statutory provisions and in particular the power to issue a penalty under Sch. 55 for failure to deliver a “Return under s. 8(1)(a) of TMA 1970 (emphasis added [by the FTT])”.
The FTT followed its own decision in Lennon [2018] TC 06453 and concluded that it had jurisdiction to look at the validity of a s. 8 notice in considering whether or not the penalties could stand. The FTT also held that if no s. 8 notice had been validly given to the Appellant, any return submitted would be a “voluntary” return and any penalties issued for late filing would consequently be invalid (as held in Wood [2018] TC 06339).
HMRC sought to discharge their burden of proving that valid penalties had been issued by submitting the following:
- an extract from their computer records entitled Return Summary which purports to indicate that a notice to file for the tax year 2013/2014 was issued on 6 April 2014.
- an extract from their computer records indicating that a notice to file was sent to the appellant at his address; and
- a generic copy of a notice to file comprising a letter (pro forma) dated 6 April 2014 but with no addressee or signature (or signature block).
The FTT decided it could not infer from the above evidence that a s. 8 notice had been given by an officer of the Board. In particular, the pro forma notice (worded in the third person) or computer extracts did not show whether the notice in this case would have been signed by an officer, HMRC as a body or not signed at all. HMRC's Statement of Case simply stated that a notice had been issued but did not explain by whom. The Statement also stated that notices, returns and penalty notices were issued by an automated service and it would be costly and unrealistic to keep physical evidence of all correspondence sent to all taxpayers.
In the circumstances, the FTT was unprepared to speculate that a valid s. 8 notice had been given by an officer of HMRC and the appeal was therefore allowed.
This decision expressly follows Judge Popplewell's decisions in Lennon [2018] TC 06453 and Wood [2018] TC 06339. The main issue addressed by the two decisions is whether or not the FTT has the jurisdiction to consider the validity of a notice to file when determining penalty proceedings for failure to file or late filing. In both decisions the FTT decided that it could consider the validity of such notices and that the absence of a valid notice given by an officer of HMRC invalidated any penalties issued. HMRC have been granted permission to appeal in Goldsmith [2018] TC 06284 (an earlier case dealing with the same point of jurisdiction) with a hearing scheduled for the summer of 2019. Higher authority on the point will thus be available in 12–18 months.
[1] This is an appeal against the following penalties visited on the appellant by the respondents (or “HMRC”) under Schedule 55 Finance Act 2009 for the late filing of an individual tax return for the tax year 2013–2015.
- A late filing penalty of £100 (late filing penalty).
- A daily penalty of £900 (daily penalty).
- A 6 month late filing penalty of £300 (6 month penalty).
- A 12 month late filing penalty of £300 (12 month penalty).
[2] From the papers before me I find the following relevant facts:
- The respondents' computer records suggest that a notice to file was issued to the appellant on 6 April 2014 at his home address. I deal with this and the other evidence that HMRC have adduced to justify that a valid notice to file was served on the appellant at [9–14] below.
- The filing date for a tax return for the tax year ending 5 April 2014 is 31 October 2014 for a non-electronic return, and 31 January 2015 for an electronic return.
- The appellant's paper return for the year 2013–2014 was received by HMRC on 9 December 2016.
- As the return was not received by the filing date, HMRC issued a notice of penalty assessment on or around 18 February 2015 for the late filing penalty. As the return had still not been received 3 months after the penalty date, HMRC issued a notice of daily penalty assessment on or around 14 August 2015 for the daily penalty.
- As the return had still not been received 6 months after the...
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Trustees of the Paul Hogarth Life Interest Trust 2008
...[2018] TC 06594. HMRC has been granted leave to appeal in Goldsmith. See also Lennon [2018] TC 06453, Wood [2018] TC 06339 and Smith [2018] TC 06639. One suspects that if this trend continues, HMRC may seek to make technical amendments to the law to avoid defeats in these types of circumsta......
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Chalmers
...made reference. HMRC has been granted leave to appeal in Goldsmith. See also Lennon [2018] TC 06453, Wood [2018] TC 06339 and Smith [2018] TC 06639. As regards reasonable excuse, the Tribunal drew rather a fine distinction in its reasoning as between the late-filing penalties and the late-p......