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You are here: BAILII >> Databases >> First-tier Tribunal (Tax) >> Eclipse Generic Ltd v Revenue & Customs [2013] UKFTT 248 (TC) (18 April 2013) URL: http://www.bailii.org/uk/cases/UKFTT/TC/2013/TC02662.html Cite as: [2013] UKFTT 248 (TC) |
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[2013] UKFTT 248 (TC)
TC02662
Appeal number: TC/2012/08552
INCOME TAX – penalty for late submission of P35 – disputes as to the facts – Tribunal making further findings of fact – whether HMRC had sent out a “failed transmission notice” – no – whether company reasonably believed the return had been filed on time – yes – appeal allowed.
FIRST-TIER TRIBUNAL
TAX CHAMBER
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ECLIPSE GENERIC LIMITED |
Appellant |
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THE COMMISSIONERS FOR HER MAJESTY’S |
Respondents |
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REVENUE & CUSTOMS |
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TRIBUNAL: |
ANNE REDSTON (TRIBUNAL PRESIDING MEMBER) |
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The Tribunal determined the appeal on 4 March 2013 without a hearing under the provisions of Rule 26 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 (default paper cases) having first read the Notice of Appeal dated 11 September 2012 (with enclosures) and HMRC’s Statement of Case submitted on 17 December 2012 (with enclosures).
© CROWN COPYRIGHT 2013
DECISION
2. The Tribunal decided to allow the appeal and set aside the penalty of £600.
5. The statutory provisions, so far as relevant to this case are set out below.
12. The taxpayer’s right of appeal against the penalty and the Tribunal’s powers are at TMA s 100B.
13. The taxpayer can appeal a penalty on the grounds of reasonable excuse. The relevant provisions are set out at TMA s 118(2), which, so far as is material to this appeal, provides:
“…where a person had a reasonable excuse for not doing anything required to be done he shall be deemed not to have failed to do it unless the excuse ceased and, after the excuse ceased, he shall be deemed not to have failed to do it if he did it without unreasonable delay after the excuse had ceased.”
17. On 4 August 2012 Mawdsleys successfully submitted the company’s return.
19. In relation to their conversation with HMRC on 3 August 2011 they say:
“when Mr Tony Ginge, who we spoke to, was informed of the date [the P35s for the companies in the Mawdsleys group] were sent, he suggested that it was a fault of your [ie HMRC’s] interface as that was the date you were having an update on your system and suggested we send them again which we did on 4 August 2011.”
21. The agent says that the appeal should be allowed because:
(1) the burden is on HMRC to prove a default;
(2) the company reasonably believed that the return had been submitted; and
(3) the penalty was excessive because HMRC could have sent out the penalty sooner. In its Notice of Appeal, the agent relies on various dicta from other Tribunal cases. These are not attributed, but at least one of these derives from the case of Hok v R&C Commrs [2011] UKFTT(433) (“Hok”), where the First-tier Tribunal found that HMRC had acted unfairly by delaying the issue of a penalty for late submission of a P35.
(1) On 5 April 2011 at 15.37, under the heading “form type” the printout states “IR PAYE EXB”; under the heading “status” are the words “failure response received from Department”.
(2) On 30 June 2011, under the heading “form type” the printout reads “IR-PAYE-EXB”; under the heading “status” is “Success – Document deleted from gateway.”
(3) On 4 August 2011, under the heading “form type” is “IR-PAYE-EOY” and under “status” is “Success – Document deleted from gateway.”
25. In relation to unfairness, HMRC say that when Hok was appealed to the Upper Tribunal as HMRC v Hok [2012] UKUT 363(TC), that Tribunal overturned the decision of the First-tier Tribunal on the grounds that it had “acted beyond its jurisdiction in discharging the penalties”.
26. The Tribunal’s first task is to make further findings of fact.
Whether the return was successfully filed before 4 August 2011
27. The first question is whether the return was successfully filed before August 2011.
Whether there was a computer upgrade on 4 April 2011 and if so, its consequences
33. HMRC do not provide any evidence either about this call, or the upgrade. Specifically:
(1) They do not deny that the call took place.
(2) They do not provide notes of telephone calls between Mawdesleys and HMRC. The Tribunal notes that this is unusual, as these notes are routinely provided as evidence in Tribunal hearings. In this case both the name of the HMRC employee and the date are available, making it relatively easy to trace the call.
(3) They do not deny Mawdsleys’ statement that there was an HMRC computer update on 4 April 2011.
Whether HMRC issued a “failed transmission” notice to the company
Whether a successful confirmation receipt was provided
46. That a genuine, honest and reasonable belief provides a defence in common law has long been accepted, see Reg v Tolson (1889) 23 QBD 168, 181. In the recent case of R v Unah [2011] EWCA Crim 1837, while noting the caveat in that case that “it is only with caution that one should seek to draw analogies with other statutory contexts where the concept of reasonable excuse is employed”, the Court of Appeal found that a genuine and reasonable belief was sufficient to amount to a reasonable excuse.
47. This tribunal held, following those authorities, that a reasonable belief may be a reasonable excuse, see Bellchambers v R&C Commrs [2012] UKFTT 204(TC). In Thakrar v R&C Commrs [2011] a differently constituted tribunal found that while a reasonable and honest belief potentially provided Mr Thakrar with a reasonable excuse, it found no evidence that he actually held such a reasonable belief.
49. Thus, although as HMRC say, the case of Hok decided that the First-tier Tribunal has no jurisdiction to discharge a penalty for the late submission of a P35 on the grounds that the Tribunal thinks the penalty is unfair, this is not a case which depends on an unfairness argument. Instead, it depends on the facts of the case and on the company’s reasonable excuse, which is based on those facts.
50. As a result of the foregoing, the Tribunal allows the appeal and sets aside the penalty.
ANNE REDSTON