Gilad Kalchheim v The Commissioners for HMRC
[2023] UKFTT 709 (TC)
Benjamin Simon Alan Cooke v The Commissioners for HMRC
11 April 2023
[2023] UKFTT 369 (TC)
First-tier Tribunal
Mr. Cooke didn't file his taxes on time and didn't pay on time, even after being told to do so. He tried to say he didn't know what to do, but the judge didn't believe him because he was told several times and had chances to ask for help. So, he has to pay the penalties.
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.