The Commissioners for HM Revenue and Customs v David Goldsmith
| Jurisdiction | UK Non-devolved |
| Judge | Mr Justice Fancourt,Judge Brannan |
| Neutral Citation | [2019] UKUT 0325 (TCC) |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
| Subject Matter | Tax,4 November 2019 |
| Date | 04 November 2019 |
| Published date | 04 November 2019 |
[2019] UKUT 0325 (TCC)
Appeal number: UT/2018/0037
INCOME TAX – penalty charged under paras 1 and 3, Schedule 55 Finance
Act 2009 – whether taxpayer liable to a penalty for failure to submit a tax
return under s.8(1) Taxes Management Act 1970 (“TMA”) – appeal allowed
by First-tier Tribunal on basis that penalties were invalid because the
decision to require a return did not fall within the power in s.8(1)TMA –
whether Tribunal had jurisdiction to consider that argument – whether
Tribunal entitled to reduce penalty because of special circumstances.
UPPER TRIBUNAL
TAX AND CHANCERY CHAMBER
THE COMMISSIONERS FOR HER MAJESTY’S
Appellants
REVENUE & CUSTOMS
- and -
DAVID GOLDSMITH
Respondent
TRIBUNAL:
MR JUSTICE FANCOURT
JUDGE GUY BRANNAN
Sitting in public at The Royal Courts of Justice, Rolls Building, Fetter Lane,
London EC4 on 24 and 25 July 2019
Aparna Nathan QC, instructed by the General Counsel and Solicitor to HM
Revenue and Customs, for the Appellants
David Ewart QC and Rebecca Murray, Advocates to the Tribunal
© CROWN COPYRIGHT 2019
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DECISION
Introduction
1. This is an appeal against a decision of the First-tier Tribunal (“FTT”) (Judge
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Richard Thomas) released on 3 January 2018. Mr Goldsmith, the Respondent in the
appeal to this Tribunal, appealed to the FTT against penalties imposed on him by the
Appellants (“HMRC”) in respect of his failure to deliver income tax returns for the
tax years 2011-12 and 2012-13 by the due date.
2. The FTT’s decision (“the Decision”) was to allow the appeals against the
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penalties imposed on Mr Goldsmith. HMRC now appeal against the Decision with the
permission of Judge Thomas.
The issues
3. In summary, the FTT decided that the penalties in respect of the late returns,
imposed under paragraphs 1 and 3 of Schedule 55 to the Finance Act 2009 (“Schedule
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55”), were invalid because the notices to file a tax return given to Mr Goldsmith were
not given for the purpose set out in section 8(1) Taxes Management Act 1970
(“TMA”). The FTT further decided, in the alternative, that the penalties should be
reduced to nil because HMRC’s penalty decision was flawed and there were “special
circumstances” within the meaning of paragraph 16 of Schedule 55.
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4. In short, HMRC argue that the FTT erred in deciding that the notice to file did
not fall within section 8(1) TMA because the FTT had no jurisdiction to consider that
question and that, in any event, the notices were given for the purpose set out in the
subsection. In addition, HMRC contend that the FTT also erred in holding that there
were “special circumstances” warranting a reduction of the penalties to nil.
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5. As well as penalties under paragraphs 1 and 3 of Schedule 55, HMRC also
imposed daily penalties under paragraph 4 of Schedule 55. At the hearing before us,
HMRC indicated that they were no longer pursuing their appeal in respect of the
paragraph 4 penalties.
The hearing
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6. Ms Aparna Nathan QC appeared for HMRC. Mr Goldsmith took no part in the
proceedings before us. However, Mr David Ewart QC and Ms Rebecca Murray
appeared as Advocates to the Upper Tribunal to provide assistance. We wish to
express our thanks to them and to Ms Nathan QC for their helpful submissions.
The facts and the appeal
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7. The full facts are set out at paras [29]-[60] of the Decision. We summarise
briefly those that are material to this appeal.
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8. Mr Goldsmith was an employee whose income tax payments in respect of his
employment income were collected through the PAYE system. However, for each of
the tax years 2011-2012 and 2012-2013 the PAYE deductions did not collect the full
amount of income tax due. In each year, he received a PAYE calculation (a P800)
advising him that he had underpaid tax for that year.
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9. For the 2011-12 tax year, Mr Goldsmith was issued with a PAYE calculation on
16 September 2012 advising him that he had underpaid income tax by £624.60.
Following some correspondence between the parties, on 12 July 2013 Mr Goldsmith
and HMRC reached an agreement according to which Mr Goldsmith would pay off
the underpayment by way of 33 instalments. After making the first three payments,
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the last of which was made on 24 October 2013, Mr Goldsmith failed to make any
further payments or renegotiate any “time to pay” arrangement.
10. On 2 May 2014, HMRC sent him a notice, which purported to be given under
section 8(1) TMA, requiring him to make a self-assessment return for the year 2011-
12 by 9 August 2014.
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11. Mr Goldsmith failed to deliver his 2011-12 return by the due date of 9 August
2014 and on 19 August 2014 he was issued with a notice of late filing penalty of £100
in accordance with paragraphs 1 and 3 of Schedule 55. He appealed this notice to
HMRC who upheld the penalty.
12. On 10 November 2014, Mr Goldsmith filed his 2011-12 self-assessment return.
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13. On 8 December 2014, Mr Goldsmith appealed the penalty notice to the FTT.
14. On 16 December 2014, Mr Goldsmith was issued with a notice of daily penalty
assessment for £10 in accordance with paragraph 4 of Schedule 55 of FA 2009.
15. For the 2012-13 tax year, Mr Goldsmith received a PAYE calculation on 1
August 2013 indicating that he had underpaid income tax by £289.90.
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16. HMRC sent Mr Goldsmith three ‘unpaid tax’ letters, the first of which was sent
on 4 August 2013 and the last of which was sent on 8 December 2013.
17. On 20 March 2014 HMRC sent Mr Goldsmith a notice, which purported to be
under section 8(1) TMA, requiring him to make a self-assessment return for the year
2012-13 by 27 June 2014.
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18. Mr Goldsmith failed to deliver his 2012-13 return by the due date of 27 June
2014 and on 1 July 2014 a notice of late filing penalty for £100 was issued under
paragraphs 1 and 3 Schedule 55 of the FA 2009.
19. On 8 December 2014, Mr Goldsmith appealed that penalty notice to the FTT.
20. The FTT directed that Mr Goldsmith’s appeals were to be stayed until 60 days
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after the release of the Upper Tribunal’s determination in Donaldson v HMRC [2014]
UKUT 0536 (TCC). In Donaldson the taxpayer was challenging the nature of
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