Scott Macarthur v The Commissioners for HMRC
[2023] UKFTT 997 (TC)
Michael Barrett v The Commissioners for HMRC
23 October 2023
[2023] UKFTT 902 (TC)
First-tier Tribunal
The taxman fined Mr. Barrett for not paying a tax he didn't know about. Because important letters got lost, and he acted quickly when he finally found out, the judge canceled the fine.
Key Facts
- •Mr. Barrett was assessed HICBC for 2018/19 and a £182.40 penalty for failing to notify liability.
- •He didn't appeal the tax liability, only the penalty.
- •He claimed unawareness of HICBC, letters sent to an old address, and lack of self-assessment requirement communication.
- •HMRC sent 'Nudge Letters' in 2019 and 2021 to an old address, and a letter in September 2022 to his current address.
- •Mr. Barrett claims he only received the September 2022 letter.
- •HMRC registered Mr. Barrett for self-assessment in September 2022.
Legal Principles
Reasonable excuse for failure to notify tax liability.
Schedule 41 Finance Act 2008, paragraph 20; Christine Perrin v HMRC [2018] UKUT 156; The Clean Car Co Ltd v C&E Commissioners [1991] VATTR 234; William Archer v HMRC [2023] EWCA Civ 626
Objective test for reasonable excuse: Was the taxpayer's action reasonable for a responsible individual intending to comply with tax obligations, given their experience and circumstances?
The Clean Car Co Ltd v C&E Commissioners [1991] VATTR 234
Ignorance of the law can be a reasonable excuse in certain circumstances.
Christine Perrin v HMRC [2018] UKUT 156
Factors suggesting reasonable excuse for HICBC penalty: (1) No prior tax return obligation; (2) Child benefit received before HICBC introduction; (3) No prior HMRC notification; (4) Prompt action after contact.
Chattaway v HMRC [2023] UKFTT 752 (TC)
Outcomes
Appeal allowed; penalty cancelled.
The Tribunal accepted Mr. Barrett's claim that he did not receive the 'Nudge Letters' sent to his old address. Given his lack of prior notification, reliance on PAYE, and prompt action after receiving the September 2022 letter, his failure to notify was deemed a reasonable excuse.