[2011] UKFTT 41 (TC)

TC00918

Appeal number: TC/2010/06919

Appeal against a penalty imposed for the late submission of a monthly CIS return on the grounds that the return was posted on time but delayed by the postal service

FIRST-TIER TRIBUNAL

TAX 

	MR ENDA HEATLEY	Appellant

	- and -

	THE COMMISSIONERS FOR HER MAJESTY’S
	REVENUE AND CUSTOMS	Respondents

		TRIBUNAL: S.M.G.RADFORD (TRIBUNAL JUDGE)

The Tribunal determined the appeal on 25 October 2010 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 27 August 2010,  HMRC’s Statement of Case submitted on 5 October 2010 and the Appellant’s Reply dated 7 October 2010.

© CROWN COPYRIGHT 2010

DECISION

1.	This is an appeal against the penalty of £100 imposed for the late submission of a monthly Construction Industry Scheme (“CIS”) for the period ended 5 March 2010. The return was due on 19 March 2010 and not received until 25 March 2010.
Background and Facts
2.	Under the CIS a contractor is required to send a completed return for each monthly return period to reach HMRC by the 19th of the month in which the return period ended. This is the filing date. The return period runs from the 6th of one month to the 5th of the next.
3.	If a return is received after the filing date it is treated as being late. Even if a contractor has not paid any subcontractors during the month a nil return is still required. If a return is late the contractor will be liable to a late return penalty of £100 for each month or part of a month that the return is late.
4.	The Appellant’s return for the period ended 5 March 2010 was not received until 25 March 2010 which was 6 days late and a penalty notice was issued on or a few days after 9 April 2010.
5.	The Appellant’s agent, Stevenson and Wilson appealed against the penalty on 7 June 2010 and HMRC issued a letter on 15 June 2010 giving their view of the appeal and offering a review of the decision to impose the penalty.
6.	The agent requested a review on 8 July and on 17 August 2010 a review conclusion letter was issued upholding the original decision to impose a penalty.
7.	The Appellant’s agent appealed to the Tribunal Service on 27 August 2010.
Appellant’s Submissions
8.	The Appellant’s agent claimed that the Appellant had taken reasonable steps to ensure that the monthly return would be received in advance of the 19th of the month deadline. The Appellant ensured that the postage of the CIS returns was made on the 13th of each month and the Appelant could not be liable for the inconsistent delivery patterns of the Royal Mail.
9.	The Appellant’s agent conceded that their client was unable to provide any proof of postage but should not be obliged to use a private carrier to deliver the returns as this represented a needless expense.
10.	They were appealing against the penalty on the grounds that the late return was due to the Royal mail inefficiency rather than an intentional failure to comply with reporting deadlines. Their client’s recent history indicated that he did ensure that his CIS monthly returns were forwarded on a timely basis but on this occasion his reporting record was tarnished by a body out of his control.
11.	They claimed that the payment of the CIS tax for the month in question was posted from the same post box on the same day at the same time with the same class of postage paid as the CIS monthly return. However the CIS cheque cleared their client’s bank account on 18 March 2010 thus was probably received prior to this yet the return posted by the same method was deemed late.
12.	The agents contended that this was a Royal Mail failure out of the hands of their client who took reasonable steps to ensure his reporting responsibilities were met.
HMRC’s Submissions
13.	HMRC contended that although proof of potage was not a legislative necessity in cases where postal delay was cited as a reasonable excuse it was reasonable to expect that some evidence of postage be produced.
14.	The Appellant had previously appealed against a penalty imposed for the late submission of a CIS return on the grounds of postal delay. On that occasion the appeal had been allowed but the Appellant was sent an educational letter on 9 December 2009 informing him that in future evidence of postage would be required in case of postal delays.
15.	The cheque for payment of the CIS tax and the return would have been posted to different addresses and in addition the cheque could be posted in a normal size envelope whereas the return would require a large envelope with large letter postage.
Findings
16.	The Tribunal noted that the 13 April 2010 was a Saturday when post might only be collected in the morning unless posted from a major post office. If posted after the last post on the Saturday it would not have been collected until the 15 April 2010 and additionally no proof had been offered that a large letter stamp had been used.
17.	Leniency was previously shown but the Appellant was warned that proof of postage would be required in the future. The Tribunal found that the Appellant had no reasonable excuse for the late submission of the return.
18.	Had the return been posted at a post office then a receipt as proof of postage and confirmation that the correct postage had been applied would have been supplied by the post office free of charge,
19.	The legislation has imposed penalties for the late filing of contractors’ returns in order to promote the efficient operation of the taxation system and not to compensate HMRC for lost or late paid tax. As confirmed by Special Commissioner David Demack the Tribunal must apply the law as parliament enacted it even if they are of the opinion that the amount of the fixed penalty is unfair.
Decision
20.	The appeal is dismissed and the penalty is hereby confirmed.
21.	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.

S.M.G. RADFORD

TRIBUNAL JUDGE
RELEASE DATE: 11 JANUARY 2011