Patton v Revenue & Customs (INCOME TAX/CORPORATION TAX : Penalty) [2015] UKFTT 286 (TC)
[6]The agent quotes directly from paragraph 6 of the judgement of Judge Geraint Jones in the case of Yusuf Budiadi v HMRC [2011} UKFTT 233 (TC) TC 01098 “6.…………Whilst there may be an onus upon the appellant to make the declaration/return, a person can only declare that which he knows or believes ought to be declared. If the state of his mind is that there is nothing to declare because he has made a mistake of fact, that, in my judgement, can in appropriate circumstances amount to a reasonable excuse. It may not be an exceptional circumstance but that does not prevent it amounting to a reasonable excuse. ” The agent says that the situation is different from the norm where tax returns are issued at 12 month intervals.15. HMRC’s Further Submissions HMRC say that tax returns for 2011-2012 and 2012-2013 tax years were issued to the same address on 12 June 2014. They say that the 2011-2012 return has not been sent back to them.16. HMRC say that their records demonstrate that the Appellant enrolled for Self Assessment on 25 May 2014. The form submitted showed the source of income started on 5 April 2010. However HMRC consider that the appellant should have completed self assessment tax returns from when he was appointed a company director which according to HMRC records was 10 January 2007.17. HMRC have considered special reduction under (paragraph 16 Schedule 55 of the Finance Act 2009. They say special circumstances must be “exceptional, abnormal or unusual” (Crabtree v Hinchcliffe) or “something out of the ordinary run of events” (Clarks of Hove Ltd. v Bakers’ Union). In their view there are no special circumstances which would allow them to reduce the penalty.18. Tribunal’s Observations The Tribunal agrees with HMRC that it is the Appellant’s responsibility to submit returns on time. The return for the period 2011 -2012 was due to be submitted by 19 September 2014, but it was submitted late on 6 October 2014. A penalty of £100 is therefore due unless the appellant can establish a reasonable excuse for the delay as referred to in Paragraph 23(1) Schedule 55 Finance Act 2009. A reasonable excuse is normally an unexpected or unusual event that is unforeseeable or beyond the taxpayer’s control, and which prevents them from complying with their obligation to file on time.19. It is apparent that the appellant was clearly advised in the telephone conversation that he was required to complete a return for the tax year 2011-2012. It was explained to him that because of his lateness in notifying his liability to file a return for the period he would be liable to a penalty. In the Tribunal’s view this potential penalty would not be something that is easily forgotten and should have been sufficiently memorable to the appellant for him to check the position with his agent/accountant. He appears not to have done that.20. The appellant is responsible for meeting the deadline for filing his tax return and it appears that there was a communication gap between the appellant and his agent whereby the appellant neglected to advise his agent both of the requirement for a return for 2011-2012 and the penalties that HMRC advised him would result from his late notification of the requirement to file a return for that period. Unfortunately this oversight by the appellant cannot be regarded by the Tribunal as a reasonable excuse for the late submission of the 2011-2012 tax return.21. The Tribunal has considered the case referred to by the appellant’s agent that is the case of Yusuf Budiadi. That case concerns the late submission of a return by a person in quite different circumstances to the present case. The Tribunal does not disagree with that decision but considers the decision is not applicable to the present case. In the Budiadi case the appellant was not aware of the need to make a return. In the present case in a telephone conversation with HMRC the appellant had been made aware of the need to submit a return.22. Paragraph 16 (1) of Schedule 55 Finance Act 2009 allows HMRC to reduce the penalty below the statutory minimum if they think it is right because of special circumstances. HMRC have considered whether there any special circumstances in this case which would allow them to reduce the penalty and have concluded there are none. The Tribunal sees no reason to disagree.23. HMRC has applied the late filing penalty in accordance with legislation. The appellant has not established a reasonable excuse for the late submission of his individual tax return for the period 2011-2012. There are no special circumstances to allow reduction of the penalty. Therefore the appeal is dismissed.24. 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. PETER R. SHEPPARD TRIBUNAL JUDGE RELEASE DATE: 19 June 2015