[2012] UKFTT 23 (TC)
TC01722
Appeal number: TC/2011/6452
INCOME TAX
– SURCHARGE FOR LATE PAYMENT OF TAX – Did HMRC discharge its burden of proof
on whether the tax remained unpaid on the day following the expiry of 28 days
from due date – No – should the Appeal be adjourned to clarify the ambiguity –
No – Appeal allowed
FIRST-TIER TRIBUNAL
TAX
JANE
JACKSON Appellant
-
and -
THE
COMMISSIONERS FOR HER MAJESTY’S
REVENUE
AND CUSTOMS Respondents
TRIBUNAL:
MICHAEL TILDESLEY OBE (TRIBUNAL JUDGE)
The Tribunal determined the
appeal on 12 December 2011 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 17 August 2011 and
HMRC’s Statement of Case submitted on 23 September 2011. The Appellant did not
submit a reply.
© CROWN COPYRIGHT
2011
DECISION
1. The
Appellant appealed against the imposition of a surcharge issued on 6 May 2011
in the amount of ₤74.14 for the late payment of the tax due for the year
ending 5 April 2010.
2. On
6 April 2010 HMRC issued the Appellant with a notice to file her 2009/10 tax
return by 31 October 2010 for a paper return, and if online by 31 January 2011.
The Appellant filed her return online on 28 January 2011 which contained a self
calculation of the tax due. The Appellant’s tax liability for the year was
₤1,482.92 which according to HMRC was paid on 1 March 2011.
3. The
Appellant made an electronic payment for the tax due from her bank account on
the 27 February 2011 which according to her was credited to HMRC’s account on
the 28 February 2011. The Appellant had struggled to get the monies together
because of severe financial difficulties.
4. HMRC
characterised the dispute as one of reasonable excuse. The Tribunal is
satisfied that this case was not one of reasonable excuse but about when the
payment was made and received by HMRC.
5. HMRC
in its review letter stated that it did not receive the payment until 1 March
2011. The statement of case said that the total liability was paid on 1 March
2011.
6. Section
59C (2) of the TMA 1970 states that
“Where any of the tax remains unpaid on the day
following the expiry of 28 days from the due date, the taxpayer shall be liable
to a surcharge equal to 5 per cent of the unpaid tax”.
7. In
this Appeal the day following was the 1 March 2011. The High Court in Thompson
(Inspector of Taxes) v Minzly [2002] STC 450 interpreted section 59(C)(2)
as follows:
“Section 59C(2) only came into play when the tax
remained unpaid for a period of at least 28 days from the due date. The inquiry
which needed to be made was whether that state of affairs remained in existence
on the day after that period had expired. That had to be answered in respect of
a particular point of time, not in respect of the whole of an additional
period. In practice, one had to look to the first moment of the day in
question. In the instant case, tax was unpaid on the 29th day because it
remained unpaid during the earlier part of that day. The fact that it was paid
later on in the day did not alter that fact”.
8. Thus
in this Appeal the Tribunal has to consider whether the tax owed by the
Appellant was unpaid on the first moment of the 1 March 2011. As this is a
penalty the burden of proving that the legal requirements for issuing the
surcharge have been met rests on HMRC.
9. HMRC
has provided the Tribunal with two versions: payment was not received until 1
March 2011 and the Appellant paid the liability on 1 March 2011. HMRC has not
said when on the 1 March payment was received or made. Also HMRC has not used
the word during to qualify receipt or making of payment. The Appellant’s
version was that she instructed her bank on 27 February 2011 (a Sunday) and
that the money was transferred to HMRC on 28 February 2011.
10. The manner in
which HMRC has stated its case permits the possibility that the outstanding tax
had been paid on the first moment of the 1 March 2011. In view of this
ambiguity the Tribunal has two choices, either to resolve the ambiguity against
the person who relies on it or adjourn the proceedings to clarify the
ambiguity.
11. Having regard to
the overall objective of dealing with cases fairly and justly I am not minded
to adjourn the proceedings. In reaching this decision I consider it is
disproportionate to add complexity and further delay to what is a
straightforward dispute about a modest penalty and where HMRC has had two
opportunities to state its case unequivocally. I am satisfied those factors
outweigh any potential unfairness to HMRC.
12. Given the above
circumstances, HMRC has failed to satisfy the Tribunal that the outstanding tax
from the Appellant remained unpaid on the day following the expiry of 28 days
from the due date (1 March 2011). Thus the requirements of section 59C(2) have
not been met, which means that HMRC had no authority to issue the surcharge
against the Appellant.
13. The Tribunal
allows the Appeal, and sets aside the surcharge in the sum of ₤74.14.
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.
MICHAEL
TILDESLEY OBE
TRIBUNAL JUDGE
RELEASE DATE: 5 January 2012
