[2011] UKFTT 291 (TC)
TC01153
Appeal number: TC/2011/00437
Penalty
for late return – whether there was reasonable excuse – appeal dismissed
FIRST-TIER TRIBUNAL
TAX
A
& C AKIN Appellant
-
and -
THE
COMMISSIONERS FOR HER MAJESTY’S
REVENUE
AND CUSTOMS Respondents
TRIBUNAL:
J. Blewitt (TRIBUNAL JUDGE)
The Tribunal determined the
appeal on 11 April 2011 without a hearing under the provisions of Rule 26 of
the Tribunal Procedure (First-tier Tribunal)(Tax Chamber) Rules 2009 (default
paper cases) having first read the Notice of Appeal dated 6 January 2011,
HMRC’s Statement of Case submitted on 15 February 2011 and the Appellant’s
Reply dated 7 March 2011.
© CROWN COPYRIGHT
2011
DECISION
1. By
Notice of Appeal dated 6 January 2011, the Appellants appealed against two
fixed penalties imposed on them in their capacity as partners of USA Fried
Chicken, in the total sum of £400 for the late filing of the partnership return
for the year ended 5 April 2009.
2. The
2008/2009 partnership return was issued on 6 April 2009; the filing date was 31
October 2009 for a paper return or 31 January 2010 if the return was filed
online.
3. A
paper partnership was received by the Respondents on 13 September 2010. A
penalty notice in the sum of £100 was issued to each of the two partners, Mrs
A.J Akin and Mr C Akin on 16 February 2010. A second penalty notice in the sum
of £100 was issued to each of the two partners on 3 August 2010. It is the two
penalty notices against each partner against which the Appellants appeal.
4. By
letter dated 9 September 2010, the Appellants appealed to the Respondents
against the fixed penalties, stating that their accountant downloaded a return
from the internet and sent it to the tax office in Portsmouth on 30 April 2010.
A duplicate was also sent on 16 July 2010.
5. The
Respondents offered a review of the decision to impose penalties on 22 October
2010 which was accepted by the Appellants by formal notice of request for a
review dated 8 November 2010. The reasons stated by the Appellants for not
accepting the Respondents’ decision were that the partnership return was sent
in on time. A letter annexed to the formal request from the Appellants’
accountant, B.P. Hutchins, dated 16 August 2010 stated that:
“Neither Mrs or Mr Akin were aware that an online
Partnership Return required special software to complete online...nor did they
receive any information that special software was required. Mr Akin received a
“fine” notice and was advised to download a paper Partnership Return. This was
completed and posted...on 30th April. Mrs Akin then received
duplicate partnership return in the post on 7th July and this was
completed and posted...on 16th July.”
6. Following
a review, the Respondents upheld the decision to impose penalties on 17
December 2010.
7. The
Notice of Appeal dated 6 January 2011 states the grounds of appeal as being:
“We did make a mistake when we tried to send our
Return via the internet without using 3rd party software. Clearly
our agent missed the information regarding needing 3rd party
software...When we found out that the tax office was three months behind on
their post etc we downloaded a copy from the internet and forwarded this on to
our agent. Our agent sent this to Portsmouth on 30th April 2010. We
eventually received our Tax Return in the post at the beginning of July. We
forwarded this to our agent and asked her to send another copy for us just to
make sure that they did receive it this time, this was sent on 16th
July...both of these were sent in the allowed time...after all our
efforts...the tax office is saying they never received the downloaded copy or
the photocopy in April and July but only received another photocopy...on the 13th
Sept 2010...the only conclusion...is that with the tax office being so far
behind...they were lost. It is not fair that we are being penalised...”
8. The
Appellants’ response to the Respondents’ Statement of Case dated 7 March 2011
contends that the Return issued on 6 April 2009 was not received by the
Appellants. The Appellants explain that they ceased trading on 31 July 2008 and
therefore had no need, and insufficient funds, for the 3rd party
software required to submit their return online. The Appellants reiterate that
returns were submitted on 30 April 2010 and 16 July 2010. The Appellants accept
that they had made a mistake in that they did not realise 3rd party
software was required to submit a return online but contend that a letter
received from the Respondents indicated that paper returns could be submitted
after 31 January. A letter from HMRC to Mrs Akin dated 3 February 2011 was
attached to the Appellants’ response; the letter states that the last year for
which a return must be completed is the year ended 5 April 2010, and that any
outstanding return must be filed either online or by sending a paper return.
The letter refers to guidance as to completing a tax return on the HMRC website
and a telephone number is provided should the Appellant wish to make contact.
9. In
this case, the filing date was 31 October 2009 for a paper return or 31 January
2010 if the return was filed online. The return was received on 13 September
2010.
10. The Taxes
Management Act 1970 (“TMA”) provides that where a reasonable excuse existed
throughout any period of default, the Tribunal may set the penalty aside.
11. The information
is somewhat contradictory in that the Appellants agent, in the letter to the
Respondents dated 16 August 2010, states that the Appellants were unaware that
3rd party software was required in order to submit a return online.
In contrast, the Appellants stated in their grounds of appeal dated 6 January
2011 that “our agent missed the information regarding needing 3rd
party software”. I take the view that whether the fault lies with the
Appellants’ agent or with the Appellants themselves that this does not amount
to a reasonable excuse for the late submission of the return. The requirement
for 3rd party software is not new and has been well publicised by
HMRC. Ignorance cannot, in my view, amount to a reasonable excuse, nor can blame
be transferred to an agent as it is a well established principle that ultimate
responsibility for ensuring that tax obligations are met lies firmly with the
taxpayer. While I am sympathetic to the fact that the Appellants had ceased
trading and could not afford the software, I find as a fact that the
alternative method of submitting a paper return was an option readily available
to them and that, having chosen not to avail themselves of this option, the
subsequent lack of awareness as to the requirement for specific software cannot
amount to a reasonable excuse.
12. The Appellants
contend in the grounds of appeal that the returns were sent in within the
allowed time, having been sent in April and July 2010. I can only conclude that
the Appellants have been mistaken in their understanding as to the deadlines
which were 31 October 2009 for a paper return or 31 January 2010 if filed
online. It may well be that the Appellants did send in returns in both April
and July 2010; I have no reason to doubt their assertions, however even if this
were the case the deadline had passed and the penalties were lawfully imposed.
13. I am referred to
the letter from HMRC to Mrs Akin dated 3 February 2011, which states:
“The last year we need you to complete a tax return
for is the year ended 5 April 2010...We do not intend to issue further tax
returns to you...but if you have any tax returns outstanding you must file them
now at www.hmrc.gov.uk or send us a paper
return.”
This letter appears to me to be a standard letter; it
makes no specific reference to the penalties, which by the date of the letter
of 3 February 2011 had already been imposed, nor does it relate to the late
submission of the return for the year ended 5 April 2009. I take the view that
this letter does not provide any basis upon which the Appellants could conclude
that the time for submitting a return was endless.
14. The appeal is
dismissed and penalties upheld.
15. This document
contains full findings of fact and reasons for the decision. Any party
dissatisfied with this decision has a right to apply for permission to appeal
against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal)
(Tax Chamber) Rules 2009. The application must be received by this Tribunal
not later than 56 days after this decision is sent to that party. The parties
are referred to “Guidance to accompany a Decision from the First-tier Tribunal
(Tax Chamber)” which accompanies and forms part of this decision notice.
TRIBUNAL JUDGE
RELEASE DATE: 4 MAY 2011
