A & C Akin v Revenue & Customs [2011] UKFTT 291 (TC)

FTT-Tax
A & C Akin v Revenue & Customs
[2011] UKFTT 291 (TC) · 2011-05-04
[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 30 th April. Mrs Akin then received duplicate partnership return in the post on 7 th July and this was completed and posted...on 16 th 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 3 rd party software. Clearly our agent missed the information regarding needing 3 rd 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 30 th 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 16 th 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 13 th 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 3 rd 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 3 rd 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 3 rd 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 3 rd 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 3 rd 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