[2010] UKFTT 478 (TC)

TC00739

Appeal number: TC/2010/02758

Penalty imposed for late submission of Employers Annual Return – Appellant experienced difficulty filing on-line – whether reasonable excuse - no

FIRST-TIER TRIBUNAL

TAX 

	DALTON PIERCY PARISH COUNCIL	Appellant

	- and -

	THE COMMISSIONERS FOR HER MAJESTY’S
	REVENUE AND CUSTOMS	Respondents

		TRIBUNAL: 	MICHAEL S CONNELL (TRIBUNAL JUDGE)						ALAN R REDDEN (MEMBER)			

Sitting in public at Newcastle, Manor View House, Kings Manor, Newcastle upon Tyne,  on 3 September 2010

Mr John Cunliffe for the Appellant

Mrs Rosalind Oliver, Higher Officer HMRC, for the Respondents

© CROWN COPYRIGHT 2010

DECISION

1.	This is an appeal against penalties imposed for the late submission of the Employers Annual Return for the tax year ending 5 April 2009.
2.	An employer has a statutory obligation to make end of year returns before the 20 May following the end of a tax year in accordance with Regulation 73 of the Income Tax (PAYE) Regulations 2003 and paragraph 22 of Schedule 4 of the Social Security (Contributions) Regulations 2001.
3.	In the case of an employer failing to make an end of year return on time Section 98A (2) and (3) Taxes Management Act 1970 provides for a fixed penalty of £100 for each month (or part of a month) during which the failure continues.
4.	Mr John Cunliffe, Clerk of Dalton Piercy Parish Council, appeals on behalf of the Council. He is also Clerk of Greatham Parish Council and has made a separate appeal on behalf of Greatham Parish Council under TC/2010/02757. In all correspondence Mr Cunliffe has linked the two appeals together as the circumstances are very similar.
5.	The final filing date for the Council’s end of year return was 19 May 2009. A penalty notice for £400 was issued on 28 September 2009. The return was received on 21 October 2009.
6.	Mr Cunliffe is the only employee of Dalton Piercy Parish Council. He was appointed on 1 March 2008. Mr Cunliffe registered with HMRC to file end of year returns on-line on 28 April 2008 and the registration was activated on 13 May 2008.
7.	Mr Cunliffe experienced difficulties lodging the return due on 19 May 2008 on-line. A penalty was imposed. Subsequently with the help of HMRC he was able to file the return on-line and subsequently appealed the penalty which was waived by HMRC.
8.	Mr Cunliffe again experienced difficulties filing the Council’s end of year return which was due by 19 May 2009. He said that he found the form too complicated and on 29 May wrote a brief letter to HMRC enclosing his tax return stating his salary to be £1,080 and tax of £216. He mentioned that he had found the on-line filing system complicated and expressed the hope in his letter to HMRC that the information he was providing was sufficient for their purposes. HMRC say they never received this letter.
9.	Following imposition of the penalty of £400 on 28 September 2009 Mr Cunliffe appealed on behalf of the Parish Council. Briefly his grounds of appeal were that in May 2009 he had asked for but not received help from HMRC in order to complete the return. Apparently he was unaware that having registered for on-line filing he would not receive returns for completion and filing and appeared to be under the impression that HMRC were sending returns to the address of his predecessor.
10.	HMRC reviewed their decision to impose a penalty and in their review letter of 11 February 2010 pointed out that an HMRC officer had called on Mr Cunliffe and shown him how to complete a P35 on-line, explaining that if he encountered any further problems he should contact HMRC’s employers helpline. He was also informed that he had the option of completing paper versions if necessary provided they were returned by 19 May. HMRC also informed Mr Cunliffe that as the penalty could not exceed the amount of tax liability for the year the £400 penalty would be reduced to £216, being the amount of tax payable.
11.	Under common law the onus of proof rests with the Appellant to provide evidence and facts to support the appeal.
12.	The point at issue in this appeal is whether there was a reasonable excuse for the late filing of the Parish Council’s 2008/09 Employers Return and whether the reasonable excuse lasted throughout the period of default.
13.	The law does not say what a reasonable excuse is. HMRC takes the view that it is an exceptional event beyond the tax payer’s control. 
14.	Mr Cunliffe had received instructions on how to file end of year return on-line. The penalty imposed in 2008 had been waived and Mr Cunliffe had been warned that the same excuse for late filing would not be accepted by HMRC again. There is no record of any contact from Mr Cunliffe prior to 19 May 2009. HMRC say that they did not receive his letter of 29 May 2009 but that was in any event ten days after the final filing date of 19 May 2009. HMRC say there was no record of any contact from Mr Cunliffe until after the penalty was imposed. He contacted HMRC on 7 October 2009 and lodged the end of year return shortly afterwards. HMRC had no record of any attempts to obtain help with filing the end of year 2009 return.
15.	The Tribunal concluded that Dalton Piercy Parish Council had not shown that a reasonable excuse existed for the late filing of the 2008/09 Employers Return or that a reasonable excuse existed throughout the period of default. It is the responsibility of the employer to ensure that its tax affairs are up to date and any necessary returns submitted on time. Legislation places responsibility for delivery of the completed Employers Annual Return on the employer.
16.	For the above reasons the Tribunal dismissed the appeal and upheld the penalty of £216.
17.	This document contains full findings of fact and reasons for the decision. The Appellant has a right to apply for permission to appeal against this decision.  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.

Michael S Connell

TRIBUNAL JUDGE
RELEASE DATE: 7 October 2010