Tysim Holdings Ltd
| Jurisdiction | UK Non-devolved |
| Judgment Date | 27 September 2019 |
| Neutral Citation | [2019] UKFTT 606 (TC) |
| Date | 27 September 2019 |
| Court | First Tier Tribunal (Tax Chamber) |
[2019] UKFTT 606 (TC)
Judge Tracey Bowler, Mrs Sheila Cheesman
The appellant did not attend and was not represented.
Ms Helen Gould, litigator of HM Revenue and Customs' Solicitor's Office appeared for the respondents
Annual tax on enveloped dwellings – Penalties for late filing of returns and payment of ATED – FA 2009, Sch. 55 and 56 – Whether non-resident taxpayer's ignorance of law was a reasonable excuse – No – Whether HMRC's decision on special circumstances could be revisited – No.
[1] This is an appeal by the Appellant (referred to as “Tysim Holdings”) against penalties totalling £4605 imposed by the Respondents (“HMRC”) under paragraphs 3, 4, 5 and 6 of Schedule 55 Finance Act 2009 and paragraph 3 of Schedule 56 Finance Act 2009 (“Schedule 56”) for:
- the late filing by Tysim Holdings of Annual Tax on Enveloped Dwellings (ATED) returns required under section 159 Finance Act 2013 for the chargeable periods 2015–16, 2016–17 and 2017–18; and
- the late payment of the ATED for the same tax years.
[2] The penalties that have been charged can be summarised as follows:
- a £100 late filing penalty under paragraph 3 of Schedule 55 imposed on 28 June 2018;
- daily late filing penalties totalling £900 under paragraph 4 of Schedule 55 imposed on 3 October 2018;
- a £300 six month late filing penalty under paragraph 5 of Schedule 55 imposed on 3 October 2018;
- a £300 12 month late filing penalty under paragraph 6 of Schedule 55 imposed on 3 October 2018;
- a £350 30 days late payment penalty under paragraph 3(2) Schedule 56 imposed on 22 November 2018;
- a £350 six month late payment penalty under paragraph 3(3) Schedule 56 imposed on 22 November 2018;
- a £350 12 month late payment penalty under paragraph 3(4) Schedule 56 imposed on 22 November 2018;
- (8) a £100 late filing penalty under paragraph 3 of Schedule 55 imposed on 11 July 2018;
- (9) a £350 30 days late payment penalty under paragraph 3(2) Schedule 56 imposed on 22 November 2018;
- (10) a £350 six month late payment penalty under paragraph 3(3) Schedule 56 imposed on 22 November 2018;
- (11) a £350 12 month late payment penalty under paragraph 3(4) Schedule 56 imposed on 22 November 2018;
- (12) a £100 late filing penalty under paragraph 3 of Schedule 55 imposed on 17 September 2018;
- (13) a £352.50 30 days late payment penalty under paragraph 3(2) Schedule 56 imposed on 22 November 2018;
- (14) a £352.50 six month late payment penalty under paragraph 3(3) Schedule 56 imposed on 22 November 2018.
[3] On 15 November 2017 Tysim Holdings wrote to HMRC with ATED returns for the tax years in question. The letter was received by HMRC on 20 November 2017. HMRC responded on 22 November 2017 saying that the returns were incomplete. Tysim Holdings registered for an HMRC Government Gateway account and filed the ATED returns online on 19 December 2017. Payment of the ATED was made by Tysim Holdings for each of the chargeable periods 2015–16, 2016–17 and 2017–18 on 20 December 2017.
[4] On 18 October 2018 Tysim Holdings first sought to appeal to HMRC against penalty notices issued by HMRC. On 26 November 2018 HMRC rejected the appeal and offered a review.
[5] Tysim Holdings appealed to the Tribunal on 14 December 2018.
[6] The appeal to HMRC of the penalty notices issued in June, July and September 2018 was a late appeal. HMRC have now prepared a full Statement of Case which deals with the substantive appeals (and does not suggest that the Tribunal should refuse to deal with any of the appeals because they were made late to HMRC). We therefore consider that HMRC have now given consent under section 49(2)(a) of the Taxes Management Act 1970 (“TMA”).
[7] No representative of Tysim Holdings attended the hearing and it was not represented at the hearing. However, emails from the Chairman and director of Tysim Holdings, Mr Chan Hua Eng, state clearly that Tysim Holdings expects the hearing to proceed in its absence. We were therefore satisfied that Tysim Holdings had been notified of the hearing and, in view of the evidence in the papers and the detailed submissions provided by Mr Chan Hua Eng, we considered it to be in the interests of justice to proceed with the hearing under rule 33 of The Tribunal Procedure (First-Tier Tribunal) (Tax Chamber) Rules 2009. The hearing proceeded by way of hearing the submissions of HMRC as set out in their Statement of Case.
[8] The evidence consisted of the bundle prepared by HMRC, letters and emails from Mr Chan Hua Eng, including a letter dated 1 August 2019 from Mr Chan Hua Eng to the Tribunals' service, a response to HMRC's statement of case and a sheet of evidence about Mr Chan Hua Eng's background submitted by HMRC on 31 July 2019. Taking into account all of the evidence we made the following factual findings.
[9] Tysim Holdings acquired a dwelling in London prior to 1 April 2012. The dwelling is a flat.
[10] The value of Tysim Holdings' interest in the dwelling on 1 April 2012 was £1,100,000.
[11] Following the introduction of the ATED, Tysim Holdings was due to submit an ATED return for the chargeable period 1 April 2015–31 March 2016 by 1 October 2015 and to pay the ATED by 31 October 2015.
[12] Tysim Holdings was due to submit an ATED return and to pay the ATED for the chargeable period 1 April 2016 –31 March 2017 by 30 April 2016.
[13] Tysim Holdings was due to submit an ATED return and pay the ATED for the chargeable period 1 April 2017–31 March 2018 by 30 April 2017.
[14] Tysim Holdings was not aware of the ATED obligations until November 2017. Tysim Holdings contacted HMRC by fax on 8 November 2017 to inform HMRC about the ownership of the property and liability to pay the ATED. Tysim Holdings then attempted, without success, to file the ATED returns by post on 15 November 2017. The returns for the three chargeable periods were then successfully submitted on 19 December 2017 and payment of the ATED was made on 20 December 2017.
[15] The penalty notices listed at the start of this decision were all received by Tysim Holdings.
[16] Mr Chan Hua Eng is Chairman of Tysim Holdings. His son is the Chief Executive Officer and Managing Director of Tysim Holdings.
[17] Mr Chan Hua Eng graduated from Bristol University in 1952 with a Batchelor of Law degree. He was called to the Bar at Middle Temple in 1953. Until his retirement in 1987 he was the senior partner of a large legal firm in Kuala Lumpur. He is an associate member of the Institute of Taxation.
[18] The property is owned by Tysim Holdings for use by members of Mr Chan Hua Eng's family.
[19] Tysim Holdings does not own, or have an interest in, any other dwellings in the UK.
[20] The grounds of appeal in the notice of appeal can be summarised as follows:
- Tysim Holdings had a reasonable excuse for the late submission of the returns and payment of the ATED;
- there were special circumstances which mean that the penalties imposed for the late submission of the returns and payment of the ATED should be reduced;
- the penalties imposed on Tysim Holdings are not justified and are out of proportion to the facts. It is harsh to expect a person resident in another country to know about the introduction of a new law.
[21] In summary, Tysim Holdings submits that:
- it is accepted that HMRC were correct to issue the penalties imposed by them on Tysim Holdings; but
- Tysim Holdings had a reasonable excuse for the failure to file returns and pay the ATED because:the application of the reasonable excuse provisions by reference to a prudent person, exercising reasonable foresight and due diligence, having proper regard for their responsibilities under the relevant legislation, puts too high a responsibility upon a taxpayer where entirely new legislation is introduced without any accompanying fanfare or public announcement. This is particularly the case where the taxpayer is located in a foreign country and has no business in the UK apart from owning one flat;it is unreasonable to expect a taxpayer to check whether there is new legislation on a continuous daily basis;Tysim Holdings had acted in an exemplary manner correcting the situation as soon as it was aware of the obligations;the appeal process is intended to ameliorate the harshness of the application of the presumption that a taxpayer is expected to know the law;the Tribunal should decide whether there is an acceptable excuse and, if so, the degree of culpability that can be attributed to the Appellant so as to justify and non-imposition of the penalties, or the amount that should be remitted to mitigate the severity of the punishment;the judgement of Judge Mosedale in Welland [2018] TC 06265 still allows for a reasonable excuse for not complying with the law, particularly where there was no deliberate intention not to comply;the decision of Judge Medd in Clean Car Co Ltd [1991] BVC 568 had the idea of a trader in mind. The description of the approach to the application of test of reasonable excuse is not appropriate in the situation of Tysim Holdings which just happened to own one piece of property intended for use by family members of its few shareholders and which was not in the business of property ownership;the approach in the case of Perrin v R & C Commrs [2018] BTC 513 described by HMRC in its Statement of Case should be applied;the case of Templar [2019] TC 06872 should be distinguished;HMRC should have taken into account Tysim Holdings' behaviour once it was aware of its obligations.
[22] HMRC maintains that Tysim Holdings did not take sufficient care in relation to its statutory obligations. The actions of a taxpayer should be considered from the perspective of a prudent person, exercising reasonable foresight and due diligence, having proper regard for their responsibilities under the Tax Acts. The test is to determine what a...
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