[2011] UKFTT 403 (TC)

TC01258

Appeal number TC/2011/00159

Appeal against penalty imposed for the late submission of the P35 -Appellant director admitted that he had forgotten to submit the return but claimed that HMRC should have sent a reminder much sooner because he was only reminded when he received the penalty notice-appeal dismissed as a result of the Appellant having no reasonable excuse for the late submission of the return

FIRST-TIER TRIBUNAL

TAX 

	KINLET PROPERTIES LIMITED	Appellant

	- and -

	THE COMMISSIONERS FOR HER MAJESTY’S
	REVENUE AND CUSTOMS	Respondents

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

Sitting in public at Reading County Court on 20 April 2011

Mr I.Smith for the Appellant

Ms H.Thorn for the Respondents

© CROWN COPYRIGHT 2011

DECISION

1.	This is an appeal against a £400 penalty issued on 27 September 2010 as a result of the Appellant failing to submit its PAYE end of year return (P35) for the tax year 2009/10 by the due date of 19 May 2010.
Background and facts
2.	The completed return was eventually received online on 15 October 2010
3.	The Appellant’s director admitted that he had forgotten to make the return until he received the penalty notice.
Legislation
4.	Regulation 73 (1) of the Income Tax (Pay As You Earn) Regulations 2003 requires an employer to submit to HMRC an end of year return by the 19th May following the end of the preceding tax year.
5.	Regulation 205, of the Income Tax (Pay As You Earn) Regulations 2009 requires an employer to deliver the end of year return to HMRC electronically.
6.	Section 98A of the Taxes Management Act 1970 (“TMA”) provides that an employer is liable to a penalty if they fail to deliver their PAYE end of year return by the due date.
7.	Section 100 of the TMA authorises HMRC to issue penalties and makes provision for an appeal to be made. 
8.	Section 100B of the TMA provides that the Tribunal may set aside the penalty, confirm it or vary it if incorrect to the correct amount. 
9.	Section 118 (2) of the TMA provides that there will be no penalty if there is a reasonable excuse for the return being late provided that the return is made without unreasonable delay after the excuse ceases. 
Appellant’s Submissions 
10.	 The Appellant did not dispute that the return had been submitted late. The Appellant admitted that the director had forgotten to submit the return but claimed that he should have been sent a reminder.
11.	He did not know that fines were payable and only became aware of this nineteen weeks after the due date for the return when the penalty notice was received.
12.	The Appellant submitted that there were problems with HMRC computer systems between the dates of 6 and 15 October 2010.

HMRC’s Submissions
13.	Details of HMRC computer down time between these dates were produced to the Tribunal but HMRC confirmed that this would not have affected the amount of penalty charged as the return was submitted before the 19th of the month.
14.	HMRC submitted that it was under no obligation to issue reminders for completion of the Return.  The employers pack issued in February 2010 showed the due date for online submission of the return and therefore the Appellant was informed in advance of its obligations to file online and by the due date.
15.	HMRC submitted that a penalty notice under Section 98A(2) of the TMA had been correctly issued. The return for the year was not delivered to HMRC until 15 October 2010, over 4 months late, and referred to Appellant having 2 employees in the year.
16.	Section 98A(2)(a) of the TMA provides that where this section applies there will be a liability to a penalty of the relevant monthly amount for each month or part of a month during which the failure continues. 
17.	Section 98A(3)(a) of the TMA provides that the relevant monthly amount where the number of employees is 50 or less, is £100.
18.	The penalty notice was issued on 27 September 2010 and charged penalties for the period 20 May 2009 to 19 September 2010. In accordance with the legislation the penalties were £400, which is £100 for each month for the period covered by the penalty notice.
19.	HMRC submitted that as the penalty had been correctly issued in the correct amount the Tribunal must consider if Section 118(2) TMA applied. 
20.	Section 118(2) of the TMA provides that a person will not be deemed to have failed to do something they were supposed to if there was a reasonable excuse for the failure and if the failure was rectified without unreasonable delay once that excuse had come to an end.
21.	Ms Thorn submitted that the legislation did not define what was and what was not a reasonable excuse and so each case had to be considered on its own merits. HMRC's opinion was that there would only be a reasonable excuse if a person had been prevented from submitting a return by exceptional events outside their control.
22.	HMRC submitted that forgetting to submit the return is not a reasonable excuse and neither is the non issue of reminders.
Findings
23.	The Tribunal found that the Appellant had no reasonable excuse for the late filing of the return.
24.	An employer’s pack had been issued in February 2010 and the Appellant director admitted that he had forgotten to file the return.
Decision
25.	The appeal is dismissed and the penalty is hereby confirmed.
26.	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.

TRIBUNAL JUDGE
RELEASE DATE: 22 JUNE 2011