Christopher Legg v The Commissioners for HMRC
[2023] UKFTT 994 (TC)
Christopher Diball v The Commissioners for HMRC
28 July 2023
[2023] UKFTT 657 (TC)
First-tier Tribunal
Mr. Diball forgot to tell the taxman about extra tax he owed. He said he didn't know about the rule, but the judge said that's not a good enough excuse, so he still has to pay the penalty.
Key Facts
- •Mr. Diball failed to notify HMRC of his liability to the Higher Income Child Benefit Charge (HICBC) for the tax year 2018/19.
- •HMRC sent Mr. Diball a letter on June 11, 2021, informing him of his liability and the potential penalty.
- •Mr. Diball claims he did not receive an awareness letter from HMRC in December 2019.
- •HMRC assessed a 20% penalty (£357.60) for failure to notify.
- •Mr. Diball appealed the penalty, arguing he had a reasonable excuse due to lack of awareness of the HICBC.
Legal Principles
Higher Income Child Benefit Charge (HICBC)
Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003), s 681B; Finance Act 2008, Schedule 41
Obligation to notify tax liability
Taxes Management Act 1970 (TMA 1970), s 7
Penalties for failure to notify
Finance Act 2008, Schedule 41, paragraph 1
Penalty reduction for cooperation and disclosure
Finance Act 2008, Schedule 41, paragraphs 12 and 13
Reasonable excuse for failure to notify
Finance Act 2008, Schedule 41, paragraph 20; Perrin v HMRC [2018] UKUT 0156
Defining Potential Lost Revenue (PLR)
Robertson v HMRC [2019] UKUT 0202; Lau v HMRC [2018] UKFTT 230
Outcomes
Appeal dismissed; penalty upheld.
The Tribunal found that Mr. Diball did not have a reasonable excuse for failing to notify his HICBC liability. While he did not receive the initial awareness letter, ignorance of the law does not constitute a reasonable excuse. His cooperation with HMRC was deemed 'prompted', resulting in a lower penalty than it could have been.