Christopher Legg v The Commissioners for HMRC
[2023] UKFTT 994 (TC)
Imran Majid v The Commissioners for HMRC
25 May 2024
[2024] UKFTT 491 (TC)
First-tier Tribunal
Mr. Majid was fined for not telling HMRC about his rental income. HMRC didn't provide enough proof of how they calculated the fine, so the judge cancelled it. HMRC's policy of not explaining the fine in writing was deemed unfair.
Key Facts
- •Imran Majid appealed penalties imposed under Schedule 41 Finance Act 2008 for failure to notify chargeability to tax for tax years 2012-2020 (excluding 2014).
- •HMRC's initial correspondence was sent to an incorrect address.
- •Majid eventually provided the necessary information after receiving a letter in July 2021.
- •A Behavioural Audit Trail (BAT) call was conducted on July 5, 2022.
- •Penalties totaling £1,151.29 were assessed.
- •Majid's appeal was based on unawareness of tax requirements and belief that expenses offset income.
- •HMRC's initial witness statement (Ms. Collery) was replaced with a less detailed statement (Mr. Hall).
- •The penalty notification lacked details of the calculation and abatement.
- •The Tribunal hearing proceeded in Majid's absence due to his mental health issues.
Legal Principles
The burden of proof is initially on HMRC to show failure to notify and correct penalty calculation. It then shifts to the appellant to demonstrate reasonable excuse.
Burgess and Brimheath v HMRC [2015] UKUT 578 (TCC); Cooke v HMRC [2023] UKFTT 00369 (TC)
Rule 15 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 allows for admission or exclusion of evidence based on the overriding objective of dealing with matters justly and fairly.
Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009, Rule 15
Penalties issued by HMRC are treated as criminal penalties under the Convention on Human Rights, requiring proper notification of calculation.
Convention on Human Rights
Outcomes
Appeal allowed.
HMRC failed to meet the burden of proof regarding the penalty calculation and notification due to insufficient evidence and the lack of detail in the penalty notification, particularly concerning abatement. The replacement witness statement was deemed inadequate.