[2010] UKFTT 217 (TC)

TC00518         

   Appeal number: TC/2009/14793

Surcharge for late payment of tax – tax paper did not receive Her Majesty’s Revenue & Customs confirmation of tax due until after tax was due for payment – whether reasonable excuse – surcharge confirmed

FIRST-TIER TRIBUNAL

TAX 

	MR SIMON LEVIN	Appellant

	- and -

	THE COMMISSIONERS FOR HER MAJESTY’S
	REVENUE AND CUSTOMS	Respondents

TRIBUNAL:		Michael S Connell (Judge)
			Mr Les Howard (Member)

Sitting in public at St Katherine’s House, St Katherine’s Street, Northampton on 3 February 2010

Hearing based on the Appeal papers and schedule of evidence, neither party attending

© CROWN COPYRIGHT 2010
DECISION

1.	This is an Appeal against a surcharge imposed under section 59C(2) Taxes Management Act 1970 in respect of the late payment of tax for the year ending 05.04.2008. A tax liability of £10,427.40 was due to be paid on or before 31.01.2009 but was not paid until 02.03.2009. HMRC issued a surcharge notice on 03.04.09 amounting to £521.37.
2.	The facts of this matter are that HMRC issued a notice to file for the year ending 05.04.2008 on 06.04.2008. The filing date was 31.10.2008 for a paper return or 31.01.2009 if filed on-line. The return was filed on-line on 02.02.2009 and was therefore late. However the late filing penalty issued by HMRC was subsequently cancelled on 06.08.2009, HMRC having accepted that the Appellant had problems filing on-line.
3.	Mr Levin had chosen to calculate his tax liability himself and therefore knew the sum to pay by the due date and filed on-line whereby the liability was automatically calculated. The tax liability for the year was £10,427.40. This tax was due to be paid on or before 31.01.2009. The tax was not actually paid until 02.03.2009.
4.	Payment of tax is due in accordance with section 59(B) Taxes Management Act 1970 and in this instance, as stated above, the due date was 31.01.2009. A tax payer becomes liable to a surcharge where they are late in paying tax due and the surcharge is calculated at 5% of all tax remaining unpaid after the expiry of 28 days from the due date.
5.	HMRC issued a surcharge notice on the 03.04.2009. The surcharge was in the amount of £521.37 representing 5% of £10,427.40.
6.	A surcharge may only be set aside by the Tribunal where the tax payer had a reasonable excuse for not paying the tax throughout the period of default in accordance with section 59(C)(9). Reasonable excuse is not defined in the legislation and the term is taken to have its normal everyday meaning. HMRC customarily take this to mean that it is something exceptional or out of the tax payer’s control, for example serious illness of the Appellant or bereavement of a close relative or partner.
7.	The period of default is defined by section 59(C)(12) and means the period beginning with the due date and ending with the day before the tax due was paid. In this instance the period is from 31.01.2009 to 01.03.2009, 30 days. The notice to file issued on 06.04.2008 clearly warned that interest and a surcharge may be charged if tax was paid late.
8.	On 14.04.2009 the Appellant appealed in writing against the surcharge and the late filing penalty. In his appeal he states that:
a.	he was unable to file his return due to a problem with HMRCs application and internet explorer. As stated above the late filing penalty was cancelled on 06.08.2009, HMRC having accepted that the Appellant had encountered problems filing on-line

b.	the Appellant said he was awaiting a self-assessment statement to confirm what actions he needed to take as this was the first occasion he had owed HMRC payment, having overpaid in previous years. In the Appellant’s summary of his appeal contained in his letter to the Tribunals Service dated 19.12.2009 he states that this was the first occasion that he had unexpectedly owed monies to HMRC as a result of use of the on-line self-assessment system. He said that it was not unreasonable to have awaited confirmation of the correctness of the on-line calculations from the standard letter sent out by HMRC.
9.	The Appellant has filed on-line for the years ended 05.04.2005, 06, 07 and 08. He was aware of the amount of tax owed and the date by which payment was due. Although HMRC normally issue reminders shortly before payments are due if they do not issue a reminder it is nonetheless the responsibility and obligation of the tax payer to ensure that he ensured payment of the tax on or before the due date. It is the Appellant’s responsibility to pay on time.
10.	In the Appellant’s summary appeal letter of 19.12.2009 he also states that he was reasonably not aware that he was in danger of an ‘extreme’ penalty for late payment until such time as he received the reminder letter and that the reminder letter for whatever reason was not sent out and did not arrive until 28.02.2009. However the notice to file clearly stated that a surcharge may be charged if tax was paid late. Section 59(B)(4) Taxes Management Act 1970 states that the due date for payment of the amount of self-assessment tax as required by section 9 Taxes Management Act 1970 is 31st January following the year of assessment. The Appellant was aware of this deadline. Section 59(C)(2) Taxes Management Act 1970 states that where any tax remains unpaid on the day following the expiry of 28 days from the due date the tax payer shall be liable to a surcharge equal to 5% of the unpaid tax on that date. Taxpayers must be taken to be aware of the relevant legislation for the proper administration of the taxation system.
11.	If it appears to the Tribunal that the tax payer had a reasonable excuse for not paying the tax throughout the period of default it may set aside the imposition of the surcharge. Having considered the Appellant’s and Respondents’ written representations the Tribunal concluded that the Appellant had not shown that a reasonable excuse for late payment had existed or that it had existed throughout the full period of default.
12.	The Tribunal accordingly dismissed the appeal and confirmed the surcharge of £521.37.
13.	The Appellant has a right to apply for permission to appeal against this decision pursuant to Rule 39 of the Rules.   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.

TRIBUNAL JUDGE
RELEASE DATE 13 May 2010