[2012] UKFTT 593 (TC)
TC02270
Appeal number:
TC/2012/02619
Appeal against penalty for
late return – reasonable excuse – appeal allowed
FIRST-TIER TRIBUNAL
TAX CHAMBER
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RAMONA THEURER
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Appellant
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- and -
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THE
COMMISSIONERS FOR HER MAJESTY’S
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Respondents
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REVENUE &
CUSTOMS
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TRIBUNAL:
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JUDGE JENNIFER BLEWITT
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The Tribunal determined the
appeal on 9 August 2012 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 12 January 2012,
letter from the Appellant to HMRC and the Tribunal dated 22 July 2011, 31
August 2011 and 12 January 2012 and HMRC’s Statement of Case submitted on 7
March 2012.
© CROWN COPYRIGHT
2012
DECISION
1.
This is an appeal against a penalty in the sum of £100 imposed by HMRC
under Sections 93 (2) and (4) Taxes Management Act 1970 for the late filing of
the Appellant’s personal tax return for the tax year ended 5 April 2010.
2.
HMRC did not object to the late appeal.
Facts
3.
On 11 November 2010 a notice to file a tax return for the year ended 5
April 2010 (“the relevant year”) was issued to the Appellant. The notice was
returned as undelivered due to the fact it was not sent via airmail.
4.
HMRC reissued the notice on 25 January 2011 via airmail, advising that
the Appellant’s 2009/2010 return remained outstanding.
5.
The revised filing date for submission of the return was 2 May 2011. The
return was received by HMRC on 17 October 2011.
Appeal
6.
The Appellant appealed to HMRC on 12 April 2011, indicating that German
Tax returns had already been submitted and tax paid. The Appellant advised that
her accountant was checking the UK position but as the return was not received
on timem she had not been able to file it.
7.
A return was sent to the Appellant on 2 June 2011, along with advice as
to how to file online.
8.
On 22 July 2011 the Appellant advised HMRC by letter hat four months of
the relevant UK tax year still required checks to be made and the return would
be filed as soon as possible. The Appellant also stated that HMRC were already
aware of her self-employed income as a dentist between January and April 2010;
she had received no other earnings. The return received on 2 June 2011 would be
returned as soon as possible. It had been beyond the Appellant’s control to
file the return as it had not been received until HMRC’s letter of 2 June 2011
and thereafter required checks to be made.
9.
HMRC upheld the decision to impose a penalty by letter to the Appellant
dated 8 August 2011. HMRC took the view that having promised to file the return
as soon as possible, the reasonable excuse had ended as the return remained
outstanding.
10.
The Appellant provided the following information to HMRC by letter dated
31 August 2011:
·
HMRC had advised that a return would be received when the
Appellant returned to Germany;
·
The Appellant did not receive a return, but instead a penalty;
·
The German tax year differs to that in the UK; due to the complexity the Appellant let her German tax advisor complete the UK return;
·
The tax advisor had told the Appellant that she would have to pay
tax once but that four months of the relevant year still required checks by the
German authorities to ascertain whether tax was due in Germany or the UK;
·
On 22 July the Appellant was advised by her tax advisor that a
tax return was required to be filed in the UK;
·
As the German tax advisor did not have sufficient knowledge of
the UK tax system, the Appellant had to instruct a special UK tax advisor, who
required time to complete the return;
·
It was beyond the Appellant’s control that the German tax
authorities took so long to complete its investigation.
11.
Following a review, HMRC confirmed that the penalty was upheld, although
if the return was filed and the liability had been paid on time, the penalty
may be reduced to nil.
12.
The Appellant’s grounds of appeal contained in her Notice of Appeal to
the Tribunal can be summarised as follows:
·
The return was not received by the Appellant until the end of
June 2011, at which point HMRC stated that the penalty would be delayed until
HMRC reached a decision;
·
The German authorities took until 22 July 2011 to check the
Appellant’s return. HMRC were advised of the delay and the Appellant’s new
address, however no reply was received but a letter was sent to the old address
advising that the reasonable excuse no longer existed;
·
Usually 9 months is allowed to submit a return, however the
Appellant only had from June 2011 when the return was received;
·
The Appellant could not find a tax advisor in Germany who understood the UK tax system and she had to seek and instruct an advisor in the UK.
Submissions of HMRC
13.
The default period from 2 May 2011 to 17 October 2011 was 168 days.
HMRC accepted that the penalty had been suspended pending the outcome of the
appeal.
14.
A notice to file was sent via airmail on 25 January 2011 which advised
that the due date was 3 months after the date of the notice and that a penalty
would be imposed if the return was not submitted by the deadline.
15.
The legislation under Section 8 Taxes Management Act 1970 requires that
a return be delivered by the filing date.
16.
The front of the return issued on 2 June 2011 advised that penalties
would be imposed for late returns.
17.
HMRC accepted that the Appellant had encountered delay with the German
authorities until July 2011 however the return was not received until 17
October 2011.
18.
HMRC accepted that its letter dated 8 August 2011 was sent to the wrong
address however the Appellant’s letter was not received until 28 July 2011 and
not processed until 18 August 2011.
19.
The Appellant could have submitted a provisional return and the actions
of her agent did not provide the Appellant with a reasonable excuse.
Decision
20.
The issue for the Tribunal to consider is whether a reasonable excuse
for the late submission of the Appellant’s return existed throughout the period
of default.
21.
There was no reason to doubt the veracity of the Appellant’s assertion
that she had not received a notice to file until June 2011. Furthermore, the
information contained within the papers before me appeared to confirm that the
German tax authorities had made enquiries which I accepted delayed the
Appellant’s ability to file a return in the UK. I found, in those
circumstances, that the Appellant had a reasonable excuse until, at least, 22 July
2011.
22.
Thereafter, the Appellant was advised that by her German tax advisor
that a UK tax return was required, but that he was unable to assist. I read
carefully the correspondence from the Appellant to both HMRC and the Tribunal
from which it is apparent that although the Appellant has a good grasp of the
English language, she would be unable to complete her own return without
immense difficulty.
23.
I accepted that the Appellant had, after 22 July 2011, made all efforts
to instruct a UK tax advisor to file her return.
24.
In my view, this is an unusual case which falls within an exceptional
category. Any tax advisor in the UK would have to satisfy himself as to the
German tax position and therein the Appellant encountered difficulties as she
had with a German tax advisor who had little or no understanding of the UK tax
system.
25.
I found as a fact that these facts put this case into the rare category
whereby the filing of a return, which in normal circumstances would not amount
to a tax obligation of substantial complexity, involved the understanding of
two wholly separate and distinct tax systems and was therefore a matter in
which the Appellant, understandably required specialist assistance which cause
delay.
26.
Giving the benefit of doubt to the Appellant, I was satisfied that the
delay was of reasonable length such as would be required in order for the
return to be filed.
27.
I found that there was a reasonable excuse lasting throughout the period
of default and the appeal is allowed.
28.
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.
JENNIFER
BLEWITT
TRIBUNAL JUDGE
RELEASE DATE: 17 September 2012
