A director has lost a First Tier Tribunal (FTT) appeal over a dispute regarding late filing penalties between 2017 and 2018, which were filed more than 1,000 days late
The appellant, Martin West, went to tribunal to ask for permission to make a late appeal concerning assessments and closure notices issued by HMRC in 2018, and penalties issued in 2017 and 2018, which totalled £49,613.41.
However, West waited more than 1,000 days after the statutory time limit of 30 days to file his notice of appeal, together with the application, which gave his appeal little chance.
On 22 January 2016, HMRC wrote to West asking for details about the year ended 5 April 2015, alongside bank statements, invoices and the company’s turnover. ABC Accounting, West’s accountants at the time, were also copied in.
Neither West nor ABC responded. On 16 November 2016, HMRC forwarded a Sch 36 Notice, requiring that the information and documents listed were provided – again, no information or documents were received.
Schedule 36 of the Finance Act 2008 grants HMRC the power to make a written request for a taxpayer to provide information or produce a document to check the taxpayer’s tax position.
HMRC then sent penalties for West and ABC’s failure to comply with the notice related to the periods 10 March 2017, 28 April 2017 and 1 September 2017.
The operating officer for HMRC, Mr Mason, also sent West a ‘penalty explanation letter’ relating to the penalties set out above, which totalled £49,613.41.
On 8 March 2018, Mason issued the assessments for the years 2009-10 to 2012-13 on the basis set out in his letters to West. All the assessments informed West that he had 30 days to appeal and how to do this.
West owned several properties and operated his business on a self-employed basis. In 2009, he appointed ABC to act as his agent in dealing with HMRC. Ms Sri, an employee of ABC, held day-to-day client responsibility for West.
On 30 October 2018, Jamal Warshow, a director of ABC, reached out to HMRC and apologised for the delay. He said that he had been ill since May 2018 and that Sri had had to cover his work, and as a result had not had time to deal with West’s case.
In early 2019, no appeals had been made, resulting in HMRC presenting a bankruptcy petition to the court to recover the sums owed by West.
In total, the number of days delayed concerning each of the HMRC decisions was between 1,315 days and 1,108 days. In response, the tribunal declared that there was no doubt that these delays were ‘very serious and significant’.
According to West, the main reason put forward for the delay was the failures of ABC and Sri. In his notice of appeal, West declared that he was ‘at all times’ unaware of the proceedings as a result of the ‘lack of disclosure from the previous accountant’, namely ABC and Sri.
He also mentioned that ABC had ‘failed to file appropriate tax returns’ which had led to the delay. In addition, West also declared placed his ill health and his caring responsibilities for his mother as constituting reasons.
This was expanded in a letter from West dated 24 November 2021 to HMRC, in which he said he had suffered from epilepsy since 2009 and was since ‘subject to heavy medication’. He also suffered a heart attack in 2020 to which the stress of bankruptcy proceedings and the ‘disappearance of Ms Sri’ contributed.
HMRC argued that West’s health conditions did ‘not prevent him’ from contacting the tax authority on a number of occasions, or from speaking to Sri. In their submission, there was no basis on which his health conditions prevented him from filing in-time appeals against the decisions.
Judge Anne Redston said: ‘The delay about all the decisions was over 1,000 days, and so serious and significant, and there was no good reason for them. Those factors weigh heavily against West.
‘Added to that is the prejudice to HMRC and the appellants in other cases if permission were to be given. On the other side of the scale is the prejudice to Mr West of losing the opportunity of appealing to the tribunal, together with his reliance on his advisers.
‘However, neither of those factors carries significant weight for the reasons given above. The result of the balancing exercise is therefore that permission is refused.’
The appeal was dismissed.
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