Goodrum v Revenue and Customs (INCOME TAX/CORPORATION TAX : Appeal) [2018] UKFTT 83 (TC)
FTT-Tax
Goodrum v Revenue and Customs (INCOME TAX/CORPORATION TAX : Appeal)
[2018] UKFTT 83 (TC) · 2018-01-12
[33]In Whitney v IRC [1926] AC 37 , 52 Lord Dunedin said: "Now, there are three stages in the imposition of a tax: there is the declaration of liability, that is the part of the statute which determines what persons in respect of what property are liable. Next, there is the assessment. Liability does not depend on assessment. That, ex hypothesi, has already been fixed. But assessment particularizes the exact sum which a person liable has to pay . Lastly, come the methods of recovery, if the person taxed does not voluntarily pay." [my italics]. 34. That emphasises the role of an assessment in calculating or particularising the amount of a liability. 35. Honig v Sarsfield [1986] STC 246 was concerned with the time limit for making as assessment. The relevant time limit provision was similar to that now found in section 34 which provides that subject to the provisions of the Act, ... “an assessment to income tax or capital gains tax may be made at any time not more than four years after the end of the year of assessment to which it relates”. The question which arose in that case was as to when the assessment had been made. It was held that assessment was "made" when the officer making it (or a person he or she authorised) signed the certificate in the assessment book. This was followed in Craven v White 1987 STC 297). 36. This judgement reflects the formality of the process of assessment. That formality is also reflected in the provisions of section 30A(3) TMA which provides: : (3) Notice of any such assessment shall be served on the person assessed and shall state the date on which it is issued and the time within which any appeal against the assessment may be made.". 37. Together Honig and section 30A indicate to my mind that for the purposes of the Act an assessment is a formal document recorded as such by HMRC by which a person is notified of an amount of tax payable by him. 38. In Michael Prince and other v HMRC [2012] UKFTT 157 (TC) Judge Bishopp considered whether a statement in which HMRC calculated the unpaid liability of a taxpayer arising from the operation of a PAYE system reconciliation was an assessment to tax. He said of the calculation: “It is not the result of the ordinary assessment process, by which – quite outside the PAYE system – a taxpayer’s income, gains, allowances and reliefs are determined, a calculation of the tax is made, the calculation is notified to the taxpayer and (subject to appeal) the amount so notified becomes payable…”. He held that the calculation was not itself an assessment to tax because of the availability of means of challenge other than those in section 31. Those latter reasons are inapplicable in this appeal but I note the description of the “ordinary assessment process” and the part an assessment to tax plays in it. 39. I conclude that for the purposes of TMA an “assessment to tax” is a written formal document which indicates to a particular taxpayer the amount of tax whic HMRC calculate and consider that he or she is liable to pay,. It does not include a decision by HMRC that no tax is payable on a particular transaction or that a particular transaction is taxable. 40. There may be cases (for example where HMRC perform the calculations to determine the net tax due from a taxpayer for a year in order to compare them with the calculation in the taxpayer’s self assessment) where the results of the computation is that no further tax is due. If that result is formally notified to the taxpayer in a manner complying with section 30A I would hesitate to say that that notification was not an assessment to tax; but such a document is a computational assessment and would differ from the record of a decision that a particular sum was or was not taxable under a particular head. The latter does not assess tax, it communicates a decision. 41. Neither the letter of 2 July 2008 nor any other letter from the HMRC gave formal notice to anyone that HMRC considered that an amount of tax was payable by any particular person or provided any tax calculation; they were merely decisions that the sum was not taxable. As a result I conclude that none of the letters in which officers of HMRC expressed the view that the £200,000 was not liable to tax as employment income was an “assessment to tax” for the purpose of section 31. As a result that section provides no right of appeal to this tribunal. 42. I conclude that I have no jurisdiction to entertain an appeal against them, and Rule 8 requires me to strike out this appeal. (b) Time limits 43. In this section I consider the position if I am wrong in my earlier conclusions and one or more of the relevant letters was an "assessment to tax" within section 31(1)(d). 44. Mrs Samu says that if HMRC's decision in a letter 2 July 2008 (or any of the later letters) were an assessment under section 31(1)(d), then Mr Goodrum is out of time to make an appeal against it. She relies upon section 31A TMA which requires any appeal against an assessment under section 31(1)(d) to be made within 30 days of the making of the assessment. She accepts that section 49 TMA permits a late appeal but she notes that it does so only if either(i) HMRC agree, or(ii) the tribunal gives permission. HMRC have not agreed. She says that the tribunal should not give permission because Mr Goodrum's complaint is in reality one against Shell or the Pension Fund Trustees, and it would be an abuse of the forum of this tribunal to settle their dispute here. 45. In my judgement it would be wrong to give permission for a late appeal. That is for two reasons. 46. First, regulation 185 of the PAYE regulations provides that in determining for the purposes of section 59B TMA the residual tax payable by a taxpayer for a year, income tax which his or her employer was liable to deduct but failed to deduct should be treated as having been deducted unless it was tax which was the subject of a "direction" under regulation 72(5), 72F or 81(4). No such direction had been made under those regulations. 47. As a result even if the sum received by Mr Goodrum was taxable, PAYE would have been would be deemed to have been deducted from it. The PAYE would have been deductible in accordance with Mr Goodrum's ordinary code at the time of payment. Thus, given the size of the sum paid, the effect would be that no material further extra tax would have been due from Mr Goodrum as a result of the payment (although there might have been an obligation on Shell to make payment under the PAYE regulations). Thus a decision of this tribunal that the payment was or was not tax deductible would not materially affect Mr Goodrum's tax liability for the period in which the sum was received. 48. It does not seem to me to be at an appropriate exercise of discretion afforded to this (tax) tribunal to exercise it to make a judgement which is likely to have no material effect on the tax position of the appellant. 49. Secondly, I agree with Mrs Samu that in reality Mr Goodrum's complaint is against his former employer or the Pensions Trustee. I take note of the principle that the factual findings of this tribunal would not bind the parties in an action between Shell or the Pension trustees and Mr Goodrum. It would, in my view, be an abuse of the process of this tribunal to give permission for late appeal solely for the purposes of providing Mr Goodrun with some (uncertain) leverage in relation his approach to Shell and the Pension Trustee. 50. Thus if I was wrong in relation to meaning of assessment I would still have to strike out the appeal because it was not brought within the prescribed period and I have declined to give permission for a late appeal. Summary 51. I find that no assessment was made against which an appeal can be brought. I therefore find that this tribunal has no jurisdiction to hear the appeal which Mr Goodrum wishes to bring. 52. I am therefore compelled by Rule 8(2) to strike the appeal out. 53. The appeal is struck out. Rights of appeal 54. 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. CHARLES HELLIER TRIBUNAL JUDGE RELEASE DATE: 14 February 2018