Sheiling Properties Ltd v The Commissioners for HM Revenue and Customs
| Jurisdiction | UK Non-devolved |
| Judge | Mr Justice Trower,Judge Thomas Scott |
| Neutral Citation | [2020] UKUT 0175 (TCC) |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
| Subject Matter | Tax,8 June 2020 |
| Date | 08 June 2020 |
| Published date | 08 June 2020 |
[2020] UKUT 0175 (TCC)
Appeal number: UT/2018/0117
INCOME TAX – penalty for non-payment of accelerated payment notice – is
tax demanded under a Regulation 80 PAYE determination “disputed tax”
within APN provisions – yes – did taxpayer have a reasonable excuse for
non-payment of penalty – no – circumstances in which belief that APN was
procedurally invalid could constitute reasonable excuse – appeal dismissed
UPPER TRIBUNAL
TAX AND CHANCERY CHAMBER
SHEILING PROPERTIES LIMITED
Appellant
- and -
THE COMMISSIONERS FOR HER MAJESTY’S
REVENUE AND CUSTOMS
Respondents
TRIBUNAL:
MR JUSTICE TROWER
JUDGE THOMAS SCOTT
Sitting in public at The Royal Courts of Justice, Rolls Building, Fetter Lane,
London WC2 on 6 February 2020 and following further written submissions
received on 29 May 2020
Ben Elliott, instructed by Blackstar Defence Limited, for the Appellant
Aparna Nathan QC, instructed by the General Counsel and Solicitor to HM
Revenue and Customs, for the Respondents
© CROWN COPYRIGHT 2020
DECISION
Introduction
1. Sheiling Properties Limited (“Sheiling”) appeals against the decision of the
First-tier Tribunal (“FTT”) reported at [2018] UKFTT 0247 (TC) (the “Decision”).
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Sheiling appealed to the FTT against penalties imposed by HMRC in respect of non-
payment by Sheiling of certain accelerated payment notices (“APNs”) issued pursuant
to section 219 of the Finance Act 2014 (“FA 2014”). The APNs required advance
payment of tax under the Pay As You Earn (“PAYE”) Regulations and in respect of
national insurance contributions. The FTT determined a number of preliminary issues,
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concluding that (unless the APNs were subsequently determined to be unlawful in
related judicial review proceedings) Sheiling was liable for the penalties as charged.
2. With the permission of the FTT, Sheiling appeals against the Decision on the
ground that the FTT erred in law in concluding that an APN could be issued in respect
of tax arising from a PAYE determination. With the permission of the Upper
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Tribunal, Sheiling also appeals on the ground that the FTT erred in its interpretation
of the “reasonable excuse” defence against the penalties, and in concluding on the
facts that Sheiling did not have such a reasonable excuse.
Background
3. The relevant facts can be summarised as follows.
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4. In the tax year ending 5 April 2012, Sheiling participated in arrangements which
were notified to HMRC under the Disclosure of Tax Avoidance Scheme (“DOTAS”)
regime and allocated a scheme reference number. Under the arrangements Sheiling
made payments to two directors of the company in return for those directors incurring
obligations to subscribe for partly paid shares in the company.
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5. On 17 February 2016 HMRC issued a determination (the “Regulation 80
Determination”) under regulation 80 of the Income Tax (Pay As You Earn)
Regulations 2003 (the “PAYE Regulations”), determining that Sheiling owed tax
under those regulations in respect of the payments to the directors. It also issued
decisions under section 8 of the Social Security Contributions (Transfer of Functions)
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Act 1999 requiring payment of national insurance contributions in respect of the
payments.
6. On 25 February 2016 Sheiling appealed to HMRC against the determination and
decisions. HMRC agreed to an application to postpone the taxes due.
7. On 19 July 2016 HMRC sent two APNs to Sheiling. The first (the “PAYE
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APN”) required advance payment of PAYE income tax of £118,000. The second (the
“NIC APN”) required advance payment of primary and secondary national insurance
contributions of £67,452.
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