Scott Macarthur v The Commissioners for HMRC
[2023] UKFTT 997 (TC)
Christopher Legg v The Commissioners for HMRC
20 November 2023
[2023] UKFTT 994 (TC)
First-tier Tribunal
Someone didn't pay a tax because they didn't know about it. The court said that's not a good excuse, and they had to pay the tax plus penalties. The government doesn't have to tell everyone about every new tax rule; it's up to people to keep up-to-date.
Key Facts
- •Christopher Legg appealed penalties issued by HMRC for failing to notify liability to the High-Income Child Benefit Charge (HICBC).
- •Penalties totaled £519.60 for tax years 2018-19 and 2019-20.
- •HMRC issued a 'nudge letter' on November 28, 2019, and a follow-up letter on March 11, 2021.
- •Legg contacted HMRC on March 24, 2021, acknowledging potential liability.
- •Legg claimed ignorance of the law as a reasonable excuse.
- •Legg claimed difficulty understanding written communication due to dyslexia, but provided no supporting evidence.
Legal Principles
HMRC bears the initial burden of proving the penalties are due; then the burden shifts to the appellant to demonstrate a reasonable excuse.
Perrin v R & C Comrs [2018] BTC 513
The test for reasonable excuse is objective: would a responsible taxpayer, with the appellant's attributes and in their situation, have acted reasonably?
The Clean Car Co. Ltd. v C&E Commissioners [1991] VATTR 234
Ignorance of the law is not a reasonable excuse.
Hesketh & Anor v HMRC [2018] TC 06266, Spring Capital v HMRC [2015] UKFTT 8 (TC), Lau v HMRC [2018] UKFTT 230 (TC), Gilbert v HMRC [2018] UKFTT 437 (TC)
HMRC has no statutory duty to notify all taxpayers of changes in tax law.
Johnstone v HMRC [2018] UKFTT 0689 (TC), Nonyane v HMRC [2017] UKFTT 0011 (TC), Lau v HMRC [2018] UKFTT 230 (TC)
Potential Lost Revenue (PLR) for failure to notify is not contingent on HMRC making an assessment.
HMRC v Robertson [2019] UKUT 0202 (TCC)
The Tribunal's jurisdiction is limited to determining the application of tax provisions, not whether HMRC's actions were fair.
R & C Comrs v Hok Ltd [2012] UKUT 363 (TCC); [2013] STC 255, Rotberg v R & C Comrs [2014] UKFTT 657 (TC)
Outcomes
Appeal dismissed.
The appellant failed to establish a reasonable excuse for not notifying his liability to the HICBC. He received the nudge letter, and ignorance of the law is not a valid excuse. The penalties were correctly calculated according to Schedule 41.