TC03395: Mr & Mrs B
| Jurisdiction | UK Non-devolved |
| Judgment Date | 13 March 2014 |
| Neutral Citation | [2014] UKFTT 256 (TC) |
| Date | 13 March 2014 |
| Court | First Tier Tribunal (Tax Chamber) |
[2014] UKFTT 256 (TC)
Judge Barbara Mosedale
J Woolfe, Counsel, instructed for the Appellants
S Pritchard, Counsel, instructed by the General Counsel and Solicitor to HM Revenue and Customs, for the Respondents
APPLICATION FOR PERMISSION TO MAKE A LATE APPEAL - Deliberate inaccuracy penalty - Penalty paid and matter settled by agreement - Taxpayer had uncommunicated reservation that his name would not be published as a deliberate defaulter - Applied to appeal penalty when HMRC notified him his name was likely to published - Permission refused;APPLICATION FOR ANONYMISATION OF DECISION - Wrong for tribunal to grant anonymisation in order to preserve reputation or to prevent taxpayer's professional body discovering the imposition of penalty - Position might be different where the hearing was merely interim - As permission refused hearing was final - in principle anonymisation should not be granted - Anonymisation nevertheless granted pending any appeal - Names to be published when appeal process exhausted.
The First-tier Tribunal refused the taxpayer's application for permission to appeal late against a deliberate inaccuracy penalty, finding that the matter had been settled by contract and therefore the Tribunal did not have jurisdiction to consider the application. The Tribunal also decided that in principle anonymity should not be granted, but so as not to prejudge any appeal the decision is to be anonymised until the appeal process as regards both the application to appeal out of time and anonymity is exhausted.
The taxpayers (anonymised as Mr and Mrs B) purchased a property in 2010 for 763,750, but erroneously on the Stamp Duty Land Tax (SDLT) return the purchase price declared was 100,000 and therefore rather than paying the 30,550 of SDLT due they paid none. HMRC discovered the error in 2011 and Mr and Mrs B paid the SDLT due of 30,550. HMRC advised Mr and Mrs B that they considered a penalty of just over 16,000 to be appropriate. After some further correspondence HMRC said that they would not accept a lower penalty and gave Mr and Mrs B a last chance to settle the matter by contract settlement. The HMRC officer also said that they felt that Mr and Mrs B's circumstances met the conditions for their details to be published as "deliberate defaulters", but that they could not advise whether HMRC would publish their details as this was decided by a specialist team. Mr and Mrs B wrote back signing the agreement form to settle the case at the figure HMRC proposed, but saying that they assumed that as the matter had been finalised by agreement the HMRC officer would recommend that their details were not published and also stressing that they did not consider that they had deliberately evaded tax. Not publishing their details was especially important to Mr B because he is a solicitor and he felt any publication would wrongly impact upon his reputation and in particular he did not want the Solicitors Regulatory Authority (SRA) to find out. The HMRC officer replied saying that they had no influence over whether Mr and Mrs B's details would be published as this was decided by a specialist team and asked whether given this Mr and Mrs B still wanted to proceed to settlement. Mr and Mrs B asked for the case to be referred to the specialist team for a decision before they decided whether to agree to the settlement. As the HMRC officer could not do this, as such a decision cannot be made until the penalty has become final, he issued formal assessments for both the SDLT and penalty. HMRC undertook an independent review and the resultant letter of 3 October 2012 explained why the reviewing officer agreed that the penalty was correct. The issue of possible publication of Mr and Mrs B's details was not addressed in the review. On 25 October 2012 Mr and Mrs B replied saying that "whilst we do not agree with your findings strictly on a commercial basis we have now paid 16,038.75 by BACS to you to settle this matter in full and final. If you are not prepared to accept payment on this basis please return the payment to me immediately." HMRC responded on 31 October 2012 confirming that the appeal had been settled. On 12 March 2013 HMRC's Central Policy unit wrote to Mr and Mrs B to notify them that HMRC were considering the publication of their names and giving them 30 days to reply with representations. Mr and Mrs B replied on 10 April 2013 saying that they would not have settled the penalty appeal if they had appreciated that they could not appeal against the decision to publish. On the same day Mr and Mrs B applied to the First-tier Tribunal for permission to make a late appeal against the penalty.
The First-tier Tribunal decided that as a matter of contract law Mr and Mrs B and HMRC had settled the matter and therefore the Tribunal had no jurisdiction to consider the application for permission to appeal out of time. Whilst the Tribunal accepted that, subjectively, Mr and Mrs B did not intend to be bound by their letter of 25 October 2012 unless HMRC were bound not to publish, objectively, Mr and Mrs B did not communicate this reservation to HMRC, and it is the objective position which matters for contract law. The Tribunal therefore found that Mr and Mrs B's letter of 25 October 2012 was acceptance of HMRC's offer in their letter of 3 October 2012.
In case the First-tier Tribunal was wrong to conclude that either there was a contact to settle or that that contract meant the Tribunal had no jurisdiction to consider Mr and Mrs B's application, it went on to consider whether it would exercise its discretion and allow the late appeal application. Again the Tribunal concluded that it would refuse permission to appeal late. As its starting point the Tribunal found that the time limit should be respected unless there are very good reasons not to. The main factor in favour of giving permission to appeal out of time was the potential damage to Mr B's reputation and the very serious nature of any possible disciplinary proceedings which the SRA could take against him. However the Tribunal weighed against this Mr and Mrs B's failure to communicate the reservation about publication to HMRC, which had caused this situation, and that Mr and Mrs B were prepared to accept that they were guilty of deliberate inaccuracy and only want to resile on this because of the threat of publication.
Following the decision Mr and Mrs B applied for the decision of their case to be anonymised. Based on the Tribunal's refusal to permit the late appeal anonymity was not granted, but it was agreed to anonymise the decision until the appeal process in respect of both the application for the late appeal and anonymity is exhausted. Mr and Mrs B had submitted that publication of the decision would be akin to libel, but the Tribunal decided that this was unfounded. The fact that the hearing itself had been in public also pointed towards not allowing anonymity as the papers referred to in the hearing could be accessed under the principle of open justice and potentially the Freedom of Information Act. It was accepted that in interlocutory hearings and hearings involving primarily matters it may be appropriate for anonymity to granted, but as the out of time appeal was refused this is a final decision rather than an interim decision so this point is not applicable. The Tribunal appreciated that "a solicitor's good reputation is important to the solicitor, that that reputation is deserved is important to the public and his professional body" and protecting the solicitor's identity would be harmful to justice.
This case stems from the power available to HMRC to publish the names and addresses of people who have been penalised for deliberately failing to notify any tax due, and the "potential lost revenue" in relation to the penalty exceeds 25,000. The case highlights that a person cannot appeal against an HMRC decision to publish their name and details of their deliberate defaults, but must instead appeal against any decision the publication relies on.
[1]The appellants (anonymised as Mr & Mrs B) are married. In 2010 they jointly purchased a property. It cost them 763,750. On the Stamp Duty Land Tax ("SDLT") return the purchase price declared was 100,000. No SDLT was paid: SDLT of 30,550 was due.
[2]HMRC discovered this in 2011 when they opened an enquiry. The appellants, on the matter being brought to their attention, paid the outstanding SDLT of 30,550.
[3]In letters dated 13 April 2011 HMRC asked for information and warned the appellants (& the appellants' adviser) that HMRC was considering imposing a penalty. The letters to the appellants included two sets of guidance notes. The first was "Compliance checks - general information" and the second was "Compliance checks - penalties for errors in returns or documents." The first said, amongst other things:
what to do if you disagree
If you disagree with anything during the check please tell the officer dealing with the check what you disagree with and why.
You can appeal against most of the decisions that we make. We will write and tell you when we make a decision that you can appeal against. We will also explain the decision and tell you what to do if you disagree....
[4]The second of the guidance notes explained when HMRC would impose a penalty and how it would be calculated. It included a similar "what to do if you disagree" paragraph. The penultimate section of the guidance was as follows:
When we may publish details about you
We may publish the name, address, and other information about those who deliberately evade tax. We may be able to publish information about you if:
-we charge you a penalty for a deliberate, or a deliberate and concealed, inaccuracy, and
-the tax on which the penalty is based is more than 25,000
[5]HMRC then informed the appellants of the amount of penalty which they considered appropriate (16, 038.75) and this led to some correspondence...
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