[2011] UKFTT 285 (TC)

TC01147

Appeal number: TC/2011/00633

Appeal against an employer’s penalty imposed as a result of the late submission of a P35 return – reasonable excuse – appeal dismissed

FIRST-TIER TRIBUNAL

TAX 

	COTSWOLD SNACKS & DRINKS LTD	Appellant

	- and -

	THE COMMISSIONERS FOR HER MAJESTY’S
	REVENUE AND CUSTOMS	Respondents

		TRIBUNAL: 	J. Blewitt (TRIBUNAL JUDGE)									

The Tribunal determined the appeal on 18 April 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 14 January 2011,  HMRC’s Statement of Case submitted on 8 February 2011 and the Appellant’s Reply dated 4 March 2011.

© CROWN COPYRIGHT 2011
DECISION

1.	By Notice of Appeal dated 14 January 2011 the Appellant appeals against an employer’s penalty in the sum of £400 imposed as a result of the late submission of a P35 return for the period 2009/2010.
2.	The imposition of such a penalty is set down by statute; section 98A (2) (a) Taxes Management Act 1970 applies in this case which provides that a penalty of £100 can be imposed for each 50 employees for every month (or part thereof) that the return remained outstanding.
3.	The filing date in this case was 19 May 2010. The return was submitted online on 6 October 2010.
4.	On 27 September 2010 a penalty notice in the sum of £400 was issued to the Appellant which was calculated from 20 May 2010 to 19 September 2010. 
5.	By letter dated 6 October 2010, Mr Gareth Irvine, a Director of the Appellant Company, appealed to HMRC against the penalties. The grounds relied upon were that:
(1)	An online submission was made on 16 March 2010;
(2)	On 6 October 2010 Mr Irvine logged onto HMRC’s website to receive notice that the submission had been rejected;
(3)	No notification had been received stating whether the return was accepted or rejected.
6.	HMRC responded to the Appellant by letter dated 19 October 2010 in which it was stated that the only record of the Appellant attempting to complete the P35 was in October 2010.
7.	The Appellant formally requested a review of HMRC’s decision to impose penalties on 9 November 2010. The Appellant stated that there must be some record available as when the return was resubmitted on 6 October 2010 it clearly stated “rejected”. Due to printer problems the only evidence is a checklist for P35 summary of payment, which is dated 16 March 2010. The Appellant disputes the level of the penalties, stating they were unaware of the rejection of the return until they logged in on 27 September, having had no reason since 16 March to log on. No reminder was issued and the Appellant contends that it is unfair to penalise a business with 2 part-time employees; husband and wife, with this level of fine.
8.	By letter dated 22 December 2010, HMRC informed the Appellant that following review the penalties would be upheld. HMRC stated that there is no record of an attempt to file the return online on 16 March 2010 and that there is no obligation on HMRC to issue notices or reminders. HMRC took the view that no reasonable excuse existed.
9.	On 4 January 2011 Mr Thomson appealed to the Tribunal. I have read all of the correspondence provided between the Appellant and HMRC in addition to the Appellant’s response to HMRC’s Statement of Case. The grounds of appeal relied upon can be summarised as follows:
(1)	That things are not as cut and dried as “yes” or “no;”
(2)	The sheet provided shows that the end of year payroll was completed on 16 March 2010 and the Appellant would not have failed at that time to make a return;
(3)	The Appellant queries whether the system was working on 16 March 2010;
(4)	On 6 October 2010 when the Appellant logged on he found the status box showed “rejected.” The Appellant queries why the return would be shown as rejected if the submission had not been made.
(5)	If no letter is sent to notify of a late return, the problem cannot be rectified;
(6)	That a P60 had been produced for his wife as an employee which is stamped by HMRC on 15 June 2010, which shows that the Appellant is genuine in his contentions.
10.	The obligation to make End of Year Returns prior to the deadline of 20 May following the end of a tax year is set down by statute by virtue of Regulation 73 of the Income Tax (PAYE) Regulations 2003 and paragraph 22 of Schedule 4 of the Social Security (Contributions) Regulations 2001. It is a well established principle of case law that the responsibility to ensure that all obligations are met lies with the taxpayer.
11.	The penalties imposed as a result of failure to meet tax obligations are provided for by statute and this Tribunal has no discretion to mitigate those penalties unless it is considered that there is a reasonable excuse, in which case the penalties can be set aside.
12.	It is well publicised on HMRC’s website that messages are issued once a return has been filed online, confirming whether the submission has been successful or not and the status of the online form changes to submitted. In addition, the HMRC help line provides further assistance.
13.	There is no obligation upon HMRC to issue reminders to taxpayers or notify taxpayers that a P35 has not been received prior to the issue of penalty notices. There is also no statutory obligation upon HMRC to issue penalty notices closer to the deadline date.
14.	HMRC submits that there is no record of the Appellant attempting to submit the return on 16 March 2010. I find that there is no reason to doubt this assertion by the Appellant but that this does not provide a reasonable excuse.
15.	The onus rests on the Appellant to ensure that the return was successfully submitted. HMRC’s website makes clear that employers submitting returns online are advised to wait for receipt of an email confirming the status of the return as accepted or rejected. In the absence of such an email or notification, I do not find that the Appellant had a reasonable excuse. 
16.	I accept that the Appellant had no reason to log in until a significant period of time had passed, at which point he received the email notifying the rejection of the return, however I do not find that this amounts to a reasonable excuse as it was open to the Appellant, following the attempted submission, to have made checks to see if any notification had been received.
17.	I do not accept the Appellant’s query as to whether HMRC’s systems were working on 16 March 2010; HMRC have no record of this and I accept that the Appellant would not have been able to use the online forms by logging into the system had there been a technical fault.
18.	I find as a fact that the penalties were lawfully imposed and that there is no reasonable excuse for the late filing of the return.
19.	The appeal is dismissed and penalties upheld.
20.	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: 3 MAY 2011