Paul Burchett v The Commissioners for HMRC
[2024] UKFTT 121 (TC)
Matthew Grimmer v The Commissioners for HMRC
2 February 2024
[2024] UKFTT 119 (TC)
First-tier Tribunal
Mr. Grimmer didn't know about a tax he owed (HICBC). The tax office charged him late fees and penalties. The court said he had a good reason for not knowing and cancelled the late fees and penalties for the earlier years, but not for the later years because those were within the time allowed by law. Essentially, the court was sympathetic to his ignorance but also firm on the rules for how long the tax office had to collect the tax.
Key Facts
- •Mr. Grimmer appealed against High Income Child Benefit Charge (HICBC) assessments and penalties for tax years 2015/16 to 2019/20.
- •HMRC issued discovery assessments totaling £6,620 and penalties totaling £1,145.20.
- •Mr. Grimmer argued he wasn't aware of the HICBC and didn't receive relevant HMRC communications.
- •The appeal was filed late, but HMRC didn't object.
- •The case hinges on the validity of discovery assessments under s29 TMA 1970, particularly in light of HMRC v Wilkes, and the existence of a reasonable excuse for Mr. Grimmer's failure to notify.
Legal Principles
Discovery assessments under s29 TMA 1970; HMRC's power to issue discovery assessments for HICBC after HMRC v Wilkes.
Income Tax (Earnings and Pensions) Act 2003, s681B; Taxes Management Act 1970, s29; Finance Act 2022, s97; HMRC v Wilkes [2020] UKUT 0150 (TCC) and [2022] EWCA Civ 1612
Time limits for discovery assessments: s34 and s36 TMA 1970.
Taxes Management Act 1970, s34, s36
Reasonable excuse for failure to notify under s7 TMA 1970 and s118(2) TMA 1970.
Taxes Management Act 1970, s7, s118(2); Perrin v HMRC [2018] UKUT 156; The Clean Car Co Ltd v C&E Commissioners [1991] VATTR 234; Archer v HMRC [2023] EWCA Civ 626
Penalties for failure to notify under Schedule 41 Finance Act 2008.
Schedule 41 Finance Act 2008
Outcomes
Appeal against assessments for 2017/18 to 2019/20 refused.
Assessments were issued within the four-year time limit of s34 TMA 1970.
Appeal against assessments for 2015/16 and 2016/17 allowed.
Assessments were issued out of time. Mr. Grimmer had a reasonable excuse for not notifying due to lack of awareness of HICBC and prompt action upon becoming aware.
Appeal against penalties for all tax years allowed.
Mr. Grimmer had a reasonable excuse for his failure to notify.