Ward v Revenue and Customs (INCOME TAX/CORPORATION TAX : Penalty) [2017] UKFTT 251 (TC)
[1]The appellant is appealing against penalties that HMRC have imposed under Schedule 55 of the Finance Act 2009 (“Schedule 55”) for a failure to submit an annual self-assessment return for the year ended 5 April 2011 on time.[2]The penalties that have been charged can be summarised as follows:(1) a £100 late filing penalty under paragraph 3 of Schedule 55 imposed on 14 February 2012(2) a £300 “six month” penalty under paragraph 5 of Schedule 55 imposed on 7 August 2012(3) “Daily” penalties totalling £900 under paragraph 4 of Schedule 55 imposed on 14 February 2012.[3]The appellant’s grounds for appealing against the penalties can be summarised as follows: (1) She argues that there was a “reasonable excuse” for any failure to submit the return on time.[4]The appellant’s appeal was notified to the Tribunal late. For the following reasons, I have decided to give permission for the appeal to be notified late:[5]Firstly, the Appellant appealed to HMRC on 26 February 2013 for a ‘re-review’ of her case (which was originally reviewed on 5 February 2013), and was informed by HMRC on 12 March that the proper course of action was to appeal to the Tribunal. She then appealed to the Tribunal on 25 March 2013. Therefore although the appeal was late, the Appellant had responded quickly to both letters from HMRC.[6]Secondly, HMRC in the letter of 12 March had informed the Appellant she could make an appeal out of time to the Tribunal. HMRC have not objected to the appeal out of time. Indeed a quicker response by HMRC to the Appellant’s letter of 26 February would have allowed the appeal to be made in time. Findings of fact(1) It is agreed that the return was due on 31 January 2012 and was submitted on 5 November 2012.(2) Tax returns for the previous four years had also been submitted late. Discussion[7]Relevant statutory provisions are included as an Appendix to this decision.[8]It is agreed that the return was due on 31 January 2012 and was submitted on 5 November 2012. Subject to considerations of “reasonable excuse” set out below, the penalties imposed are due and have been calculated correctly.[9]The Appellant sets out three circumstances that she contends amount to a reasonable excuse for her failure to submit her tax return in time.[10]The first circumstance is that her accountants were extremely busy due to the absence of a sick colleague, who then died during 2013.[11]In her letter of 24 September 2012 to HMRC appealing against the penalties, the Appellant writes ‘Unfortunately my accountants have been extremely busy...[due to the sick colleague]. Although my accounts were given to them on 29 th July for processing they have only managed to commence work on them today’[12]The year for the 29 th July date is not specified. I presume from the context of the letter it is 29 July 2012, nearly 6 months after the date that the return was due to be filed. I therefore consider that a reasonable excuse does not apply to this circumstance, as the situation did not apply from the date the return was due to be filed.[13]The second circumstance is that she works six days a week and therefore did not have time to prepare her accounts.[14]A tax return is due to be filed around 10 months after the end of the relevant tax year. Every tax payer has an obligation to file a tax return if issued with one, and the Appellant had been filing tax returns through self-assessment for a number of years. I do not consider her working pattern to constitute a reasonable excuse to fail to comply with this obligation.[15]The third circumstance is that her mother has Alzheimer’s disease and suffered a heart attack in July 2011.[16]Whilst I appreciate that caring for her mother would take up some time, the Appellant would be aware that she had an obligation to file a tax return at the relevant date. For there to be a reasonable excuse for a failure to file a tax return, the failure must be remedied ‘without undue delay’ at the end of the period for which a reasonable excuse exists. The due date for the return was six months after her mother’s heart attack. I do not consider that the illness of her mother constitutes a reasonable excuse for the failure to file a tax return throughout the entire period 31 January to 5 November 2012. Conclusion[17]For the reasons set out above, I affirm HMRC’s decision to issue the 3 penalties that are the subject of this appeal. The appeal is dismissed. Application for permission to appeal[18]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. SARAH ALLATT TRIBUNAL JUDGE RELEASE DATE: 31 MARCH 2017