[2012]
UKFTT 598 (TC)
TC02274
Appeal number:
TC/2011/04689
Late
filing of online partnership return; penalties; s.93A (2) and (118(2) TMA; requirement
to purchase third party software not possible due to financial circumstances:
whether “reasonable excuse” – no.
FIRST-TIER TRIBUNAL
TAX CHAMBER
ALFA BIURO PARTNERSHIP Appellant
-
and -
THE
COMMISSIONERS FOR HER MAJESTY’S
REVENUE
& CUSTOMS Respondents
TRIBUNAL:
JUDGE CHRISTOPHER HACKING
Determined 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 21 June 2011 and HMRC’s Statement of Case submitted on 22
July 2011.
© CROWN COPYRIGHT
2012
DECISION
1. This
was an appeal against a decision confirmed on review imposing a fixed penalty of
£200 under section 93A(2) Taxes Management Act 1970 (TMA) following the late
submission of the Appellant’s 2009-10 partnership return.
2. The
return was due to have been filed either on paper by 31 October 2010 or
on-online by 31 January 2011. A paper return was submitted on 31 January 2011.
3. The
Appellant is a two-person partnership which filed its first partnership return
for the year 2008-09. This was a paper return. The return was not received by
the Revenue on or before the due date (31 October 2009), a matter which the
Revenue seeks to rely on to an extent in relation to the default in the filing
of the following year’s return.
4. The
law relating to the duty to file a partnership return and the power to impose a
penalty when the filing is late is set out in the Revenue’s Statement of Case.
These provisions are not in issue between the parties and will not therefore be
rehearsed here.
5. Section
93A(7) TMA read in conjunction with section 118(2)TMA provides that if the
taxpayer can establish a reasonable excuse for the whole of the default period
the penalty may be set aside. The law does not make clear what is and what is
not a “reasonable excuse” for this purpose. The Revenue in its submission
states its view that each case is to be considered on its merits but that the
excuse must have been an exceptional event outside a person’s control which
prevented them from sending back their return by the filing date.
6. The
Tribunal does not accept that this approach is definitive. The words
“reasonable excuse” are ordinary words to be construed accordingly. However the
criteria proposed by the Revenue whilst neither definitive or exhaustive, do in
the view of the tribunal, represent a reasonable starting position for
considering what is and what is not a “reasonable excuse”. It seems unlikely
that it was Parliament’s intention that a taxpayer could avoid his duty to file
a return on time by reason only of some “ordinary” excuse nor does it seem
likely that matters within the taxpayers control would generally found such an
excuse.
7. The
Appellant’s nominated partner is Ms K A Zieleninska who in her partnership’s
Notice of Appeal raises a number of matters. Ms Zieleninska states that the
paper filing effected for the year 2008-09 was in fact mailed to the Revenue on
time as can be established by proof of posting (although this was not attached
to the appeal papers and has not been seen by the tribunal). A further copy was
sent to the Revenue but this was, by that time, late. No mention is made in the
papers of a penalty having been imposed and this seems consistent with an
acceptance by the Revenue of real doubt as to exactly what had happened to the
paper return on that occasion.
8. In
relation to the 2009-10 filing Ms Zielensinska says that in light of the
trouble experienced on the last occasion she decided to file online. This had
the benefit, she states, of allowing more time to file. What Ms Zielensinska
did not appreciate was that in the case of a partnership return the third party
software necessary to effect the online filing has to be provided by the
taxpayer and not the Revenue. The cost of the software would have been, £100, a
sum which Ms Zielensinska says she could not afford to pay. She therefore
completed and filed a paper return received by the Revenue on 31 January 2011,
some 3 months after the due date for a paper filing.
9. The
Revenue in its Statement of Case points out that the requirement on the part of
a nominated partner filing a partnership tax return online to provide its own
software is published on its website together with details of accredited software
suppliers within different price ranges. That the purchase by the taxpayer of
such third party software is a necessary step in filing a partnership return
online is made quite clear.
10. A copy of the
form of notice sent to the Appellant on 6 April 2009 together with a full
return is exhibited to the Revenue’s submission. On page 1 the following
appears:
“You can file the tax return using:
·
this form and any supplementary pages you need; or
·
the internet (you will need to use commercial software which
you may have to buy). …………………..To register and enrol for self assessment online
for Partnerships go to www.hmrc.gov.uk and from the “do it online” menu
select “self assessment”
11. The facts in this matter are not substantially
disputed. The circumstances concerning the 2008-10 filing are not entirely
clear but for the purpose of this decision the tribunal assumes that the
Appellant did in fact file its return on time.
12. The substance of the Appellant’s appeal lies in
its view that the requirement for a partnership seeking to file online to
purchase third party software is unreasonable. The tribunal finds that this
requirement is however made known clearly by the Revenue both on its website
and in its notice sent out with the full paper return. There is some argument
that the latter does not perhaps make the position quite as clear as it might
be. The above wording concerning online filing “which you may have to buy” admits
of the possibility that there may be circumstances in which a purchase is not
needed but this is dealt with much more comprehensively in the website to which
those intending to file online are directed (see paragraph 9 above).
13. The tribunal finds that the Appellant’s failure to
adequately assess the requirements for online filing and to purchase the
necessary software to achieve this cannot in law amount to a “reasonable
excuse” for the late delivery of its paper filing and accordingly this appeal
must be refused and the penalty of £100 for each partner (total £200) imposed under
section 93A (2) TMA is confirmed.
14. 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.
CHRISTOPHER HACKING
TRIBUNAL JUDGE
RELEASE DATE: 28 March 2012
