Key Facts
- •Mr. Benjamin Simon Alan Cooke appealed against penalties imposed by HMRC under Schedule 55 (late filing) and Schedule 56 (late payment) of the Finance Act 2009.
- •Penalties related to his liability for the High-Income Child Benefit Charge (HICBC).
- •HMRC issued awareness letters regarding HICBC in 2014 and 2019.
- •The Appellant did not appeal an assessment for the 2017 tax year.
- •The Appellant failed to file tax returns for 2018 and 2019 and pay tax due for 2017, 2018, and 2019 by the statutory deadlines.
- •The Appellant claimed unfamiliarity with self-assessment, issues with online access, and paying back Child Benefit as reasons for non-compliance.
- •HMRC reviewed the appeal and upheld its decision.
Legal Principles
No penalty arises without default of a statutory obligation.
Perrin v R & C Commrs [2018] BTC 513
HMRC bears the initial burden of proving the penalties are due; then the burden shifts to the appellant to show reasonable excuse.
Perrin v R & C Commrs [2018] BTC 513; Burgess & Brimheath v HMRC [2015] UKUT 578 (TCC)
Reasonable excuse is an objective test, considering the taxpayer's circumstances.
Rowland v R & C Commrs (2006) Sp C 548; The Clean Car Co. Ltd. v C&E Commissioners [1991] VATTR 234
Insufficiency of funds is not a reasonable excuse unless due to events outside the taxpayer's control.
Schedule 55, para 23; Schedule 56, para 16
HMRC has discretion to reduce penalties due to special circumstances, but these must be exceptional and not general.
Schedule 55, para 16; Schedule 56, para 9; Crabtree v Hinchcliffe [1971] 3 All ER 967; Clarks of Hove Ltd v Bakers Union [1979] 1 All ER 152; Collis v HMRC [2011] UKFTT 588 (TC); Bluu Solutions Ltd v Commissioners for Her Majesty's Revenue & Customs [2015] UKFTT 95
Taxpayer has a statutory obligation to notify HMRC of tax liability within six months.
Taxes Management Act 1970, section 7
Statutory deadlines for filing and paying tax must be adhered to.
Taxes Management Act 1970, section 8; Finance Act 2009, Schedule 55 & 56
Outcomes
Appeal dismissed.
The Appellant failed to establish a reasonable excuse for the late filing and payment defaults. HMRC's decision not to reduce penalties was not flawed.