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You are here: BAILII >> Databases >> First-tier Tribunal (Tax) >> The Suffolk Gate Company Ltd v Revenue & Customs [2013] UKFTT 237 (TC) (17 April 2013) URL: http://www.bailii.org/uk/cases/UKFTT/TC/2013/TC02651.html Cite as: [2013] UKFTT 237 (TC) |
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[2013] UKFTT 237 (TC)
TC02651
Appeal number: TC/2012/06858
PAYE – appeal against the penalty imposed for the late payment of PAYE- Schedule 56 Finance Act 2009- whether fact that appellant was given no specific warning was a reasonable excuse- no – whether lack of knowledge was a reasonable excuse – no – whether penalty was unfair – no- appeal dismissed
FIRST-TIER TRIBUNAL
TAX CHAMBER
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THE SUFFOLK GATE COMPANY LTD |
Appellant |
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THE COMMISSIONERS FOR HER MAJESTY’S |
Respondents |
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REVENUE & CUSTOMS |
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TRIBUNAL: |
JUDGE SANDY RADFORD |
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HELEN MYERSCOUGH FCA |
Sitting in public at Norwich on 27 November 2012
Mr Jackson, Chairman of the Appellant, for the Appellant
Mr Reeve, officer of HMRC, for the Respondents
© CROWN COPYRIGHT 2013
DECISION
2. The penalty was originally £4,694.17 but reduced as a result of the decision in the Agar case.
Legislation
(4) If P makes 1, 2 or 3 defaults during the tax year, the amount of the penalty is 1% of the amount of tax comprised in the total of those defaults.
(5) If P makes 4, 5 or 6 defaults during the tax year, the amount of the penalty is 2% of the amount of tax comprised in the total amount of those defaults.
(6) If P makes 7, 8 or 9 defaults during the tax year, the amount of the penalty is 3% of the amount of tax comprised in the total amount of those defaults.
(7) If P makes 10 or more defaults during the tax year, the amount of the penalty is 4% of the amount of tax comprised in those defaults.
In this and other paragraphs of Schedule 56 “P” means a person liable to make payments.
5. Under paragraph 11 of Schedule 56 HMRC is given no discretion over levying a penalty:
11(1) Where P is liable to a penalty under any paragraph of this Schedule HMRC must –
(a) assess the penalty,
(b) notify P, and
(c) state in the notice the period in respect of which the penalty is assessed.
(3) An assessment of a penalty under any paragraph of this Schedule—
(a) is to be treated for procedural purposes in the same way as an assessment to tax (except in respect of a matter expressly provided for by this Schedule),
(b) may be enforced as if it were an assessment to tax, and
(c) may be combined with an assessment to tax.
(1) On an appeal under paragraph 13(1) that is notified to the tribunal, the tribunal may affirm or cancel HMRC’s decision.
(2) On an appeal under paragraph 13(2) that is notified to the tribunal, the tribunal may-
(a) affirm HMRC’s decision, or
(b) substitute for HMRC’s decision another decision that HMRC had the power to make.
(3) If the tribunal substitutes its decision for HMRC’s, the tribunal may rely on paragraph 9-
(a) to the same extent as HMRC…[…],or
(b) to a different extent, but only if the tribunal thinks that HMRC’s decision in respect of the application of paragraph 9 was flawed.
7. Paragraph 9 (referred to in paragraph 15) states:
(1) If HMRC think it right because of special circumstances, they may reduce the penalty under any paragraph of this Schedule.
(2) In sub-paragraph (1) “special circumstances” does not include –
(a) ability to pay, or
(b) the fact that a potential loss of revenue from one taxpayer is balanced by a potential over-payment by another.
(3) In sub-paragraph (1) the reference to reducing a penalty includes a reference to-
(a) staying a penalty, and
(b) agreeing a compromise in relation to proceedings for a penalty.
Background and facts
9. The appellant paid all its 12 monthly PAYE payments late during the tax year 2010/11.
Appellant’s submissions
HMRC’s submissions
25. Mr Reeve referred to the decision in the case of Dina Foods Ltd [2011] UKFTT 709 (TC) in which Judge Berner stated:
“having considered the evidence of the information provided by HMRC concerning the introduction of the PAYE and NIC penalties, we are of the view that no reasonable employer, aware generally of its responsibilities to make timely payments of PAYE and NIC amounts due, could fail to have seen and taken note of at least some of the information published and provided by HMRC”
“the obligation is to make payment: the lack of warning (or early assessment) of a penalty is not an excuse for failing to make payment”
27. Mr Reeve submitted that proportionality arguments were proper to judicial review because they were a challenge to the fabric of the legislation and the judicial review function had not been granted to the First-tier Tribunal. He submitted that this had been confirmed by the Upper Tribunal in the case of Hok.
Findings
31. In the case of Agar Limited [2011] UKFTT 773 (TC) which was a similar appeal against the penalty imposed for the late payment of PAYE the decision of the Tribunal was that the penalties were not “plainly unfair” within the meaning of the Enersys decision and so were not disproportionate.
33. We found that ignorance of the law was not a reasonable excuse.
Decision
SANDY RADFORD