“When considering a “reasonable excuse” defence, therefore, in our view the FTT can usefully approach matters in the following way: (1) First, establish what facts the taxpayer asserts give rise to a reasonable excuse (this may include the belief, acts or omissions of the taxpayer or any other person, the taxpayer’s own experience or relevant attributes, the situation of the taxpayer at any relevant time and any other relevant external facts). (2) Second, decide which of those facts are proven. (3) Third, decide whether, viewed objectively, those proven facts do indeed amount to an objectively reasonable excuse for the default and the time when that objectively reasonable excuse ceased. In doing so, it should take into account the experience and other relevant attributes of the taxpayer and the situation in which the taxpayer found himself at the relevant time or times. It might assist the FTT, in this context, to ask itself the question “was what the taxpayer did (or omitted to do or believed) objectively reasonable for this taxpayer in those circumstances?” (4) Fourth, having decided when any reasonable excuse ceased, decide whether the taxpayer remedied the failure without unreasonable delay after that time (unless, exceptionally, the failure was remedied before the reasonable excuse ceased). In doing so, the FTT should again decide the matter objectively, but taking into account the experience and other relevant attributes of the taxpayer and the situation in which the taxpayer found himself at the relevant time or times.” 144. It can be seen from the grounds of appeal at various stages (initial appeal, review and notification to the Tribunal) that the appellant is putting forward two basic grounds for his having a reasonable excuse for his admitted failure: (1) That he could not be expected to know of the new requirements to make a NRCGT return, and that his actions, or non-actions, were those of the reasonable person acting in the way HMRC say such a person should. (2) That he would have expected the person doing the conveyancing to inform him of any relevant tax obligations If either is established that is sufficient. Was the appellant’s lack of knowledge a reasonable excuse? 145. The appellant says in effect that he personally could not have been expected to know or take steps to find out about his obligation and that his actions or omissions in that regard were those of a reasonable person ordinarily wishing to meet his tax obligations. 146. HMRC in the SoC have put forward as the criterion or test by which the appellant’s excuse is to be judged as being “to consider what a reasonable person who wanted to meet their tax obligations would have done in the same circumstances and decide if the action of the person met that standard.”
“The test is to determine what a reasonable taxpayer in the position of the taxpayer would have done in those circumstances, and by reference to that test to determine whether the conduct of the taxpayer can be regarded as conforming to that standard.” 148. I do not think HMRC’s embellishment by reference to the taxpayer wanting to meet their tax obligations adds anything material. A taxpayer who did not want to meet their tax obligations would clearly not be a reasonable one. 149. HMRC say in their SoC that a reasonable taxpayer in the appellant’s circumstances, that of a person who had become non-resident and who sold a residential property in the UK, would have: (1) stayed up to date with legislation affecting their activities in the UK (2) researched what is expected regarding their tax obligations (3) consulted HMRC’s website because it clearly showed that a return was required within 30 days of completion. 150. In my judgment HMRC’s formulation of what a reasonable taxpayer should do is a wholly unrealistic counsel of perfection. I cite again what Judge Berner said in Barrett at [161]: “The test is one of reasonableness. No higher (or lower) standard should be applied. The mere fact that something that could have been done has not been done does not of itself necessarily mean that an individual’s conduct in failing to act in a particular way is to be regarded as unreasonable. It is a question of degree having regard to all the circumstances, including the particular circumstances of the individual taxpayer. There can be no universal rule; what might be considered an unreasonable failure on the part of one taxpayer in one set of circumstances might be regarded as not unreasonable in the case of another whose circumstances are different.” 151. At [160] Judge Berner rejected HMRC’s suggestion (referred to at [158]) that because the appellant there was a sub-contractor who had some knowledge of the CIS scheme as a recipient of payments, that awareness of the scheme should have put a reasonable taxpayer on enquiry as to his obligations as a contractor under the same scheme and he should have made specific enquiries with an accountant or with HMRC. 152. In this case the appellant had no such familiarity with the NRCGT rules, and absolutely no reason to be put on enquiry about them. 153. But HMRC have played what they see as their trump card, that ignorance of the law is no excuse, citing what Judge Mosedale said in a 2016 case on Schedule 36 notices, Qualapharm . In my decision in McGreevy I said that the maxim that ignorance of the law is no excuse was not an absolute rule. In some subsequent decisions such as Hesketh and another v HMRC[2017] UKFTT 871 and in Welland itself (which HMRC cite here in support of another matter) and in Hart v HMRC[2018] UKFTT 207 Judges Barbara Mosedale and Guy Brannan have disagreed with me. 154. But in Perrin v HMRC[2018] UKUT 156 at [82] the Upper Tribunal, seeking to give some guidance on an issue that has divided judges of this Tribunal as they are encouraged to do [8] said on this subject: “One situation that can sometimes cause difficulties is when the taxpayer’s asserted reasonable excuse is purely that he/she did not know of the particular requirement that has been shown to have been breached. It is a much-cited aphorism that “ignorance of the law is no excuse”, and on occasion this has been given as a reason why the defence of reasonable excuse cannot be available in such circumstances. We see no basis for this argument. Some requirements of the law are well-known, simple and straightforward but others are much less so. It will be a matter of judgment for the FTT in each case whether it was objectively reasonable for the particular taxpayer, in the circumstances of the case, to have been ignorant of the requirement in question, and for how long. The Clean Car Co itself provides an example of such a situation.”
“In my judgment, in the circumstances of this case, it was not unreasonable for Mr Barrett to have been unaware of the filing obligations in question …” 156. The filing obligation in question was that of returns of payments made to subcontractors under theConstruction Industry Scheme Regulations 2005 . In Clean Car Co Ltd v Commissioners of Customs and Excise the law of which the appellant was ignorant was regulation 26 of theValue Added Tax (General) Regulations 1985 . 157. I do not classify the requirement to make an NRCGT return as basic law that can reasonably be expected to be known by everyone who falls within its ambit. In my view it is more arcane, less well known, less simple and straightforward than that in s 8 TMA and as equally obscure as the law in Barrett and Clean Car Co , if not more so. 158. HMRC say that they did not issue late filing penalties where a late CGT return was received by7 May 2016 (in other words where the date of completion fell in the year 2015-16, the first year that the liability to tax and the requirement for the return existed. The reason for this was “to allow taxpayers and agents sufficient time to become familiar with them”. 159. But why would they need a year to become familiar with a simple system about which information was clearly available from April 2015? And how would taxpayers potentially affected by the legislation who were not up to date with the outer reaches of FA 2015 but who were disposing, like the appellant, of a property in 2015-16 know they needed to be familiar? This “amnesty” amounts to HMRC admitting that the system was obscure and unfamiliar. 160. I consider, applying the test in Perrin at [82], that it was objectively reasonable for the appellant to have been ignorant of the requirement to make an NRCGT return in his circumstances. I therefore hold that he had a reasonable excuse for his failure to file the return on time, and on that account would have cancelled the penalty had the appellant been an appropriate person. Can the appellant rely on a third party? 161. The appellant said in his first letter that was he expecting to be alerted to the requirement to file the return by the conveyancing firm he used. That amounts to reliance on a third party to alert the appellant to his obligation. The review conclusions letter from HMRC did not deal with this issue at all. The SoC deals with it in one paragraph where it says that it remained the appellant’s responsibility to submit the return regardless of whether they have delegated the task. The appellant did not delegate the task to the conveyancing firm, because he was unaware of the requirement, so he could not delegate it. 162. There follows an allegedly complete sentence which I find utterly bamboozling: “Unless the failure of the Agent when considered in the light of all the circumstances amounts to a reasonable excuse and the Appellant could not have taken reasonable steps to meet their obligation.” 163. What is meant to be the consequence if the failure of the agent does amount to a reasonable excuse, and a reasonable excuse for what? It may be a ham-fisted attempt to say that if the agent’s failure to do something (but what? File the return on behalf of the appellant?) is explicable, for example they became seriously ill just at the time they were supposed to do the something, that would give the appellant a reasonable excuse so long as they could not have filed the return themselves by taking reasonable steps. Seen in this light it seems to be an attempt to interpret paragraph 23(2)(b) Schedule 55. 164. That paragraph makes it clear that reliance on a third party is not a reasonable excuse only if the appellant themselves did not take reasonable care to avoid the failure to file. There is nothing in it to say that the third party’s (not necessarily an agent’s) actions have to amount to a failure to file the return themselves (though that will often be the case with eg accountants entrusted to file income tax or VAT returns). In my view all that is necessary is that the actions or omissions of a third party caused or substantially contributed to the failure, and that the appellant took what steps to prevent the failure that were reasonable to take. There may be many cases where there were no steps a taxpayer could take to prevent the failure, and many cases where it is not reasonable to expect any steps to be taken before the date for filing the return. 165. On this particular issue of third party reliance Barrett is also instructive. The caveat I must enter about this decision is that the reasonable excuse provision it was considering, s 118(2) TMA, contains no qualified exception to the definition of reasonable excuse such as is found in paragraph 23(2)(b) Schedule 55. I consider that point later. 166. In Barrett [9] Judge Berner said about the question of reasonable excuse and in particular third party reliance: “154. The test of reasonable excuse involves the application of an impersonal, and objective, legal standard to a particular set of facts and circumstances. The test is to determine what a reasonable taxpayer in the position of the taxpayer would have done in those circumstances, and by reference to that test to determine whether the conduct of the taxpayer can be regarded as conforming to that standard. Whilst other cases in the First-tier Tribunal may give an indication of the approach that has been taken in the particular circumstances at issue, those cases cannot be regarded as providing any universal guidance. 155. Tribunals should, in particular, be cautious in making generalised statements concerning perceived categories of case, and equally circumspect about judging what is reasonable as a matter of the legal test by reference to perceived policy. Although the relevant statutory provisions may be subject to a purposive construction, that is not the same as the setting of parameters for the application of a reasonable excuse provision by reference to the tribunal’s own perception of underlying policy. In the case of s 118(2) TMA, with which this case is concerned, and which contains no reference to reliance on third parties, it is not in my view possible or permissible to discern any underlying purpose or policy with regard to such reliance from the statutory language. 156. Nor do I consider that there can be any principled distinction between cases which involve complex or “arcane” provisions of tax law, and those which may be regarded as more commonplace. That is nothing more than one of the circumstances to be taken into account in the application of the objective standard. 157. I turn then to the facts and circumstances of Mr Barrett’s case. I am concerned in this respect not with the failure of Mr Barrett to deduct tax and make payments to HMRC, but with his failure to make returns, starting with the annual return for 2006-07 that was due, under regulation 40A of theIncome Tax (Subcontractors in the Construction Industry) Regulations 1993 , on19 May 2007 , and subsequent monthly returns under the 2005 Regulations. 158. Mr Barrett has, since around 2000, been a self-employed small jobbing builder. He had some experience of the CIS, or at least its predecessor scheme, from the perspective of a sub-contractor, when working as part of a team on more substantial construction projects. That, argued Miss McCarthy, gave Mr Barrett an awareness of the CIS which, when coupled with his experience as an employer after 2000 and the need to operate an analogous deduction system for PAYE, would have put a reasonable taxpayer in Mr Barrett’s position on enquiry as to his obligations as a contractor under the CIS. 159. Mr Barrett did not make any particular enquiry in this regard, whether in informing his choice of accountant, which was done without any investigation into Mr Aspros’ capabilities and experience, but for convenience of access, or in seeking particular advice from Mr Aspros as to his obligations under the CIS. Mr Barrett simply provided Mr Aspros with the relevant paperwork, and signed, without question, everything which Mr Aspros put in front of him. Miss McCarthy submitted that Mr Barrett’s failure to make any check as to the position, whether from Mr Aspros or from HMRC, was unreasonable. 160. I do not agree that Mr Barrett’s actions were unreasonable. In my view, the steps taken by Mr Barrett to employ an accountant who evidently held himself out as able to provide a comprehensive service, both as regards accounting and tax, for a small business such as that of Mr Aspros, and in providing all relevant documentation to Mr Aspros, were the actions of a reasonable taxpayer in the position of Mr Barrett. Whilst Mr Barrett did not undertake any research in to Mr Aspros’ capabilities before appointing him, he was reasonably entitled to assume, from Mr Aspros’ acceptance of the appointment, that Mr Aspros would be competent to deal with both the accounting and tax aspects of his business. I do not accept that such a reasonable taxpayer would necessarily have taken separate steps to inform himself, independently of his accountant, of his obligations to make returns under the CIS, whether by seeking a second opinion, or by consulting HMRC, or HMRC’s published guidance, himself. 161. The test is one of reasonableness. No higher (or lower) standard should be applied. The mere fact that something that could have been done has not been done does not of itself necessarily mean that an individual’s conduct in failing to act in a particular way is to be regarded as unreasonable. It is a question of degree having regard to all the circumstances, including the particular circumstances of the individual taxpayer. There can be no universal rule; what might be considered an unreasonable failure on the part of one taxpayer in one set of circumstances might be regarded as not unreasonable in the case of another whose circumstances are different. 162. I take into account the fact that Mr Barrett had some experience of a deduction scheme in the construction industry. However, that experience was as a sub-contractor in the context of larger projects, and would have given Mr Aspros no particular insight into the filing obligations of a contractor. Mr Barrett was himself unaware of those filing obligations when he first employed sub-contractors, but he had provided Mr Aspros with all the necessary paperwork from which Mr Aspros had been able to prepare Mr Barrett’s accounts, including reference to expense incurred in relation to sub-contractors; accounts referring to such expenses, both for year end31 January 2006 and 2007, had been completed well before the filing date for the annual return for 2006-07. In my view, a reasonable taxpayer in Mr Barrett’s position, having employed an accountant to deal with both accounting and tax, including, PAYE, and having provided the accountant with all relevant information with respect to his business, would have been entitled to rely on that accountant to draw attention to any relevant filing obligation. It would also have been reasonable for such a taxpayer to have concluded, from his accountant’s silence, that there were no such obligations outstanding. 163. The fact that the filing obligation cannot be described as particularly complex, or arcane, does not alter the position for a notional taxpayer in Mr Barrett’s position. Mr Barrett was an ordinary small trader who, taking account of his previous experience of the CIS, cannot be imbued with any particular sophistication or knowledge of the CIS so as to put him on reasonable enquiry as to obligations he had incurred merely by employing a few sub-contractors in a small way and on individual occasions. In short, it was not unreasonable for a taxpayer in Mr Barrett’s position not himself to have been aware of the particular filing obligations under the CIS. This is not a case in which a taxpayer, knowing of an obligation, merely delegates that task to a third party and does not take reasonable steps to ensure that it has been undertaken. 164. In my judgment, in the circumstances of this case, it was not unreasonable for Mr Barrett to have been unaware of the filing obligations in question, and by appointing an accountant in the way that he did Mr Barrett acted as a reasonable taxpayer, aware of his own limitations in tax and accounting matters, would have done. There was nothing unreasonable in the manner in which Mr Barrett conducted his relationship with Mr Aspros, or in the timely provision of relevant information from which Mr Aspros could reasonably have been expected to identify the relevant filing requirements for a business such as that of Mr Barrett. It was not unreasonable for such a taxpayer to have assumed that Mr Aspros was able to, and would, advise on any relevant tax obligation that was apparent from the information provided to him. Nor was it unreasonable for a taxpayer such as Mr Barrett, having received from Mr Aspros no indication that any filing obligation had been incurred in respect of his use of sub-contractors, not to have raised the question himself whether there might be a filing obligation of which he was unaware, either with Mr Aspros, or HMRC, or indeed anyone else. 165. Accordingly, I conclude that Mr Barrett had a reasonable excuse for the non-filing of the CIS returns for which the penalties under s 98A TMA have been determined.” 167. I make no apologies for quoting so much of this decision. It is in my view as relevant to paragraph 23 Schedule 55 as it is to s 118(2) TMA so long as in the Schedule 55 case the appellant can show that they, not the third party, took reasonable care to avoid the failure. 168. The appellant says that he expected that the firm dealing with the sale of the dwelling of which he was joint owner in the UK would deal with the necessary obligations. 169. I find as fact that the appellant had that genuine and honest belief. I also consider that it was objectively reasonable for him to assume that a firm carrying out a residential property sale would inform him, knowing that he was living in Belgium and working for the EU, of any relevant tax obligation. 170. The fact that the firm failed to inform the appellant of his obligation because they did not know of it is neither here nor there. As Barrett makes clear, the accountant in that case did not do what he should have done but that did not make Mr Barrett negligent or deprive him of a reasonable excuse. 171. Because of paragraph 23(2)(b) Schedule 55 I must go on and consider whether despite my finding that the appellant reasonably relied on a third party, the appellant did not take reasonable care to avoid the failure. I am at a loss to see what the appellant could have done to avoid the failure. What should he have asked the conveyancing firm? 172. In my view his reliance on a third party, however misguided it turned out to be, was reasonable and he took all reasonable care to avoid the failure, namely none as there were none he could have taken. Thus he had another reasonable excuse for the failure. 173. Paragraph 23(2)(c) provides that if a reasonable excuse ceases, then it cannot be relied on to frank a continuing failure if the failure is not remedied within a reasonable time after the excuse ceases. The appellant says he became aware of the obligation when preparing his 2015-16 tax return and immediately submitted both outstanding NRCGT returns. HMRC do not suggest, by reference to the dates they have for actions of the appellant that this is not so, and I find that the appellant did indeed remedy the failure within a reasonable time of its discovery. 174. I would therefore have held that the appellant had another reasonable excuse for his failure to file the return on time, and on that account would have cancelled the penalty had the appellant been an appropriate person. Special circumstances 175. In relation to the question whether a special reduction of the penalties is to be made, the Tribunal has a different jurisdiction from the one it has in relation to whether there is a reasonable excuse for the failure. The jurisdiction in relation to the latter is a full review one. In relation to the special reduction the Tribunal can only intervene if the decision made by HMRC on the question is flawed in judicial review terms. The decision will be so flawed if the decision maker takes into account that which they should not taken into account, or if they fail to take into account something they should have so taken or made an unreasonable decision. 176. The review officer, Ms Storey, says that in reaching her decision that there are no special circumstances she had considered that the appellant was unaware of the new requirement for a NRCGT return and that there was no loss to HMRC because there was no tax due. These two matters are listed as numbers 1 and 2 in her letter. After item 2, there is a list of other points that the appellant made in his SA 634 in précis form, that the penalty is not reasonable; discriminatory; does not recognise prompt compliance when one becomes aware of the requirement and is disproportionate. 177. Ms Storey may have taken these into account but she gives no explanation why she thought they did not amount to special circumstances. Her decision in in my view flawed for that reason. 178. The SoC simply sets out with less detail what Ms Storey said. 179. In the HMRC reply of7 March 2018 Ms Lucy Lawrence, the compiler of the SoC, said that HMRC have continued to consider special circumstances since the appeal was notified to the Tribunal, and reiterated that HMRC consider that there are none. But she added that their post-notification consideration has included the appellant’s argument (raised first in his reply to the SoC) that his case is on all fours with that in Welland. In that case Judge Mosedale accepted that the imposition of three penalties in the same tax year for three separate disposals amounted to special circumstances, she having first held that HMRC’s decision on the subject was flawed because they did not consider it all. 180. Ms Lawrence says that she does not think that the circumstances in this case are the same as in Welland and for that reason the appellant’s disposal of two properties in the same year does not amount to special circumstances. This was because in Welland there were three disposal in quick succession. Here there were two disposal in seven months which is not quick succession. 181. The appellant’s response to this in his email of15 March 2018 is to say that the length of time between the sales is immaterial. The point is that the deadline for notifying the second disposal had already passed before he became aware of his obligations and like the taxpayer in Welland he acted immediately to remedy both failures. 182. In Welland what Judge Mosedale said on this issue was: “ Three penalties in a row 135. Although Mr Welland did not raise this as a ground of appeal, it is obvious that the penalties amount to£1,800 because he sold three properties in one tax year: had he sold two of the properties in a later tax year he would no doubt have learned from bitter experience that an NRCGT return had to made 30 days after completion. Mr Welland was unable to learn from his mistakes, as he was late filing all three returns before he learned of his filing obligation. 136. Does the fact Mr Welland sold three properties in one tax year amount to special circumstances? 137. Taking into account the principles explained in Warren , I find that the circumstances are unusual but not unique. Can it be said it is significantly unfair for Mr Welland to bear the whole penalty? A taxpayer selling a single valuable property who failed to make the return would be penalised once; Mr Welland, selling three not so valuable properties, was penalised three times. And it is clear he did learn from his mistakes: he filed as soon as he realised his mistake and avoided the 12 months penalty on the last of the three sales. 138. I think that does amount to special circumstances, particularly in circumstances (which is not in dispute) where the taxpayer has previously had a good compliance record. Parliament, while intending to penalise non compliance, must have intended taxpayers to learn from their non-compliance. Because of the three sales in quick succession, Mr Welland was unable to do so. I consider that the penalties should be reduced so that only the penalty on the first sale in tax year 15/16 should be payable. In other words, I reduce the penalty to£700 .” 183. In my view the appellant is correct. It is not the precise gap between the sales (and the gap between the first and last sales in Welland was six and a half months – see [10]) that persuaded Judge Mosedale that the circumstances were special: it was the fact that Mr Welland learned from his mistake, as Parliament intended him to by enacting Schedule 55 FA 2009, that he filed as soon as he realised there was a problem and that he had a good compliance record. 184. Thus in my view Ms Lawrence has taken into account something she should not have, the length of time between successive disposals, and failed to take into account the actual reason for Judge Mosedale’s decision. In Welland Judge Mosedale reduced to nil the penalties on the second and third disposals. In this case the obvious thing for me to do when remaking the decision, as I am entitled to do, is to cancel the penalty for the second disposal. But the appellant has not appealed it. I do not think that would have prevented me from effecting a reduction, and I would have, had it been necessary, reduced the initial penalty on the first disposal here to nil. 185. There are further matters which the appellant has raised and which were taken into account by Ms Storey and possibly again by Ms Lawrence in her continuing review of this issue but in relation to which they have not given any reasons for their rejection of them as special circumstances. It is therefore impossible for me to consider whether they have failed to take into account relevant matters or have taken into account irrelevant ones when coming to their decisions on each. They are in my view flawed decisions (see in this regard A Taxpayer v HMRC[2018] UKFTT 892 (TC) (Judge Guy Brannan)). Discrimination 186. If the discrimination of which the appellant complains can be remedied by an application of law on which this Tribunal can adjudicate then there is no need to consider whether such discrimination amounts to special circumstances. 187. In a previous decision ( Alison and Richard Bradshaw v HMRC[2018] UKFTT 368 (TC) ) on a penalty for failure to make an NRCGT return, I considered the UK/Canada Double Taxation Convention in this respect. In that decision I said: “42. Article 22 is about non-discrimination. Paragraph (1) says: “(1) The nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances are or may be subjected.” 43. I have no information to suggest whether the appellant is a national of Canada. And I observe that the requirement which is more burdensome has to be more burdensome than a requirement on UK nationals. The NRCGT return is a burden placed on non-residents which is more burdensome than that placed on UK residents, although the UK residents concerned will include many non-nationals. 44. The commentary on Article 24 of the OECD’s Model Double Taxation Convention concerning non-discrimination states: “1. This Article deals with the elimination of tax discrimination in certain precise circumstances. All tax systems incorporate legitimate distinctions based, for example, on differences in liability to tax or ability to pay. The non-discrimination provisions of the Article seek to balance the need to prevent unjustified discrimination with the need to take account of these legitimate distinctions. For that reason, the Article should not be unduly extended to cover so-called ‘indirect’ discrimination. For example, whilst paragraph 1, which deals with discrimination on the basis of nationality, would prevent a different treatment that is really a disguised form of discrimination based on nationality such as a different treatment of individuals based on whether or not they hold, or are entitled to, a passport issued by the State, it could not be argued that non-residents of a given State include primarily persons who are not nationals of that State to conclude that a different treatment based on residence is indirectly a discrimination based on nationality for purposes of that paragraph. ” [My emphasis] 45. The commentary goes on (at paragraph 7) to point out that a non-resident and a resident of a given state are not “in the same circumstances” as each other. 46. I conclude that there is nothing in the DTA that can help the appellants.” 188. The Convention between Belgium and the UK is in terms materially identical to those in the UK/Canada Convention so any remedy for the alleged discrimination must be found elsewhere. 189. The appellant has not identified any basis for providing a remedy for discrimination on the basis of residence for tax purposes. The European Charter on Fundamental Rights (“ECFR”) at art 21 says: “ Non-discrimination 1. Any discrimination based on any ground such as sex, race, colour, ethnic or social origin, genetic features, language, religion or belief, political or any other opinion, membership of a national minority, property, birth, disability, age or sexual orientation shall be prohibited. 2. Within the scope of application of the Treaties and without prejudice to any of their specific provisions, any discrimination on grounds of nationality shall be prohibited. ” [my emphasis] 190.Article 14 of the European Convention on Human Rights (“ECHR”) similarly says: “ Prohibition of discrimination The enjoyment of the rights and freedoms set forth in this Convention shall be secured without discrimination on any ground such as sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status.” 191. And to found a claim based on the ECHR it would be necessary for the appellant to show a breach of another right. Since he complains about being discriminated against because he has to complete a return earlier than a resident would have to making the same disposal (or has to complete two returns) I cannot see how Art 1 Protocol 1 ECHR can be engaged. No tax payment is being demanded of him in a discriminatory way. 192. Because there was no discrimination against the appellant of the type prohibited by any of the conventions I have considered, it follows that I do not consider that there is anything that could amount to special circumstances as a result. 193. In a general sense it could be said that non-residents who are required to make one or more NRCGT returns as well as an ordinary tax return are being made subject to an other or more burdensome requirement than residents [10] , and that it would be possible for that to be considered a special circumstance. But on that point I would say that it is not special. It was clearly the intention behind s 12ZB TMA to require these returns from those who were liable to make a return of the gain, as well as others, and so any discrimination is built in and intended to apply to all of those within the scope of s 12ZB. That is not unusual or special. Proportionality 194. The appellant’s argument on this is that the level of penalties was disproportionate given that no CGT was payable on the transaction. In Welland, Judge Mosedale considered the same point made by the appellant in that case. She said: “ The penalties in this particular case 145. In this case, no tax is payable, yet Mr Welland has been penalised with flat rate penalties amounting to£700 (or£1,800 before the reduction in the last section). He says this is disproportionate. 146. I am unable to agree. It is not ‘plainly unfair’ that HMRC demand returns where no tax is due: HMRC must have the right to demand tax returns so that they can check whether any tax is due. And in order to make the demand for returns effective even though the returns may show that no tax is due, there has to be a penalty for failing to provide the return. Penalties for failure to submit a return where no tax is due of£100 , followed by two subsequent£300 penalties if the return is outstanding for 6 and then 12 months is not, on any view, plainly unfair. 147. I dismiss Mr Welland’s case that the penalties imposed on him lacked proportionality.” 195. I respectfully agree with what Judge Mosedale says. Other points made by the appellant 196. Out of deference to the appellant’s clear and articulate arguments, as one would expect from a senior European Civil Servant (but ones which are mercifully free of European institutional jargon) I deal with some other points he has made which are not strictly necessary for my decision. Discrepancy in dates in notices 197. In his letter of appeal to HMRC dated21 December 2016 , by way of preamble, the appellant points out a discrepancy between the notices of assessment on the one hand and the “notification of charge”, together with 2 emails informing him of the penalties on the other. He says that the former say he has 30 days to appeal from the date of issue of the notice while the latter say that the 30 days run from the date he received the notice, and he asks which is correct. He adds that the inconsistency is poor administration and a basis for his appeal. 198. He says if the addressees of notices have 30 days from the date of issue it is unfair where HMRC use method of postal communication that takes 3 weeks to arrive. 199. The notice of assessment of the penalties clearly states that an appeal must be made within 30 days of the date of the notice. The “Notification of Charge and Notice to pay” (which I have taken to be the demand required under s 60 TMA) says that if you think the notice is wrong write within 30 days from the date of issue. The two emails he refers to are not in the bundle of papers. 200. What the law says is in s 31A TMA: “(1) Notice of an appeal under section 31 of this Act must be given— (a) in writing, (b) within 30 days after the specified date, (c) to the relevant officer of the Board. (4) In relation to an appeal under section 31(1)(d) of this Act— ( a ) the specified date is the date on which the notice of assessment was issued, and ( b ) the relevant officer of the Board is the officer by whom the notice of assessment was given.” 201. Section 31A applies to a penalty assessment where the tax involved is capital gains tax by virtue of paragraph 18(3)(a) Schedule 55 FA 2009. So the law does indeed say that the date is the date on which the notice of assessment was issued, not the date of receipt. I do not read the “Notification of charge” as saying anything different. If the emails said anything different they were wrong. But I note that HMRC’s Self Assessment Manual at SAM 10020 says: “The requirements for the submission of an appeal are [that] the appeal • Should be in writing and signed Certain appeals will also be accepted by telephone or online, provided the usual customer verification rules are followed And • Must be made within 30 days of the issue of the Notice of Liability • In the case of a partnership, must be made by the nominated partner, see subject ‘Maintain Taxpayer Record: Nominated Partner’ (SAM101290), or his/her successor, or agent The officer dealing with the appeal should use discretion as to whether the request is an appeal and whether the 30 day appeal period has been met. Appeals made via the customers Personal or Business Tax Account should be treated as signed appeals. In practice, to allow for the print and issue of Notices of Liability, 37 days should be allowed from the date the charge is recorded on the taxpayer record. For tax years 2009-10 and earlier, the time allowed is 35 days. ” [my emphasis] 202. I have difficulty in following SAM 10020. The “date the charge is recorded on the taxpayer record” presumably means in a penalty assessment case the date of the assessment. Why would the date of the notice be different? And from what information does the HMRC officer calculate the 37 days? Why would the date of issue of the notice of assessment be later than the date of the assessment? This is baffling but may explain a difference between the emails and the statutory notices, but it is not material to the appeals as no point of lateness of an appeal has been taken by HMRC. It does not constitute a ground of appeal in this case. 203. In the same letter the appellant commented about the fact that he could not retain a copy of the return he had made, and the email acknowledging it gave no information even in summary form about the content of the return even though it said “What happens once we have received you return and computation, depends on what you have told us.”
“After you click the ‘Next’ button you will see a preview page summarising the information you have provided.” 205. That next page will show the details as they are shown on the screenshot of the details that appear on HMRC’s end of the reporting system which is in the papers I have. As to what the email acknowledging the delivery of the return says I imagine that there are security considerations in play. Obviously getting two such emails on the same day for two same day returns for different properties could be momentarily confusing, but the emails do not given any important information, unlike the emails that people receive in relation to their income tax returns and penalties where they have signed up to digital communication using a secure mailbox. 206. What is to my mind somewhat surprising about the HMRC webpages about NRCGT and the return to be made and delivered to HMRC under s 12ZB TMA is the absence of any address to which a paper return is to be sent, or indeed how a paper return is obtained. That such a paper return is permitted to be delivered follows from the fact that s 115 TMA permits the use of post as an alternative to hand delivery or other types of delivery, including by electronic means unless another method is mandatory. I have not found any Act or statutory instrument that makes an electronic return mandatory in the case of the NRGCT return (and all such mandatory provisions as I have found allow for exceptions [12] ). 207. Indeed I have not found anything in the Taxes Acts or secondary legislation that does permit an electronic return under s 12ZB. I started my quest by observing that at the foot of the webpage on which the NRGCT there is a link to “Terms & Conditions”