Mark McLaughlin looks at a prospective change in legislation that may be bad news to some taxpayers who are late in filing self-assessment returns.
Back in the ‘good old days’ it was possible to pick up the phone and speak to a tax inspector to resolve tax issues; the figures in tax assessments were often handwritten; and Inland Revenue (as it was then) staff did a lot of administration by hand, rather than using a computer.
The basic structure of tax law on matters such as notices to file tax returns for individuals etc. is contained in TMA 1970. Obviously, times have changed since that legislation was introduced. However, some of the legislation still reflects old procedures. This can be problematic and has resulted in disputes.
Insufficient proof
For example, in Qureshi v Revenue and Customs [2018] 115 (TC), the taxpayer appealed against the alleged late filing of two tax returns, stating that she had not received any notices to file tax returns. HMRC needed to prove that a notice to file (under TMA 1970, s 8) had been sent. HMRC told the First-tier Tribunal that because a document headed ‘Return Summary’ contained an entry ‘Return Issued Date’ and a date alongside, it could conclude that a notice to file “must have been” sent on that date and that the ‘Return Summary’ page would only come into existence if HMRC had sent out a notice to file.
However, the tribunal held that those documents were inadequate proof that any notice to file was sent to the taxpayer.
Notices received
In Qureshi, the taxpayer stated that filing notices had not been received. By contrast, in Pritt v Revenue and Customs [2019] UKFTT 578 (TC), there was no such assertion by the taxpayer, who was late in filing several tax returns. HMRC provided a witness statement from an employee of HMRC who was familiar with the computer procedures relating to the printing and issue of late filing penalty notices. None of the documents sent to the taxpayer were returned to HMRC as undelivered by Royal Mail. The First-tier Tribunal concluded (on the balance of probabilities) that the filing notices had been served on the taxpayer.
Furthermore, in Revenue and Customs v Rogers & Anor [2019] UKUT 406 (TCC), the Upper Tribunal held that the First-tier Tribunal had wrongly concluded that TMA 1970, s 8 required an officer to be identified when a notice to file was issued; and that the First-tier Tribunal was wrong to conclude that section 8(1) required a notice to file to be issued by a “flesh and blood” officer rather than a computer.
Beyond doubt
In October 2019, HMRC published a technical note stating that legislation would be introduced in the next Finance Bill to provide that, for certain functions, anything being done by an HMRC officer may be done instead by computer or other electronic means, whether automatically or not.
The HMRC ‘functions’ to which this provision applies include giving notices to file self-assessment returns to individuals and companies.
Practical tip:
The new legislation is to apply retrospectively (and prospectively). However, any taxpayers who have received a settled judgement from a tribunal or court regarding automated filing notices, etc. should not be subject to the retrospective application of the legislation in respect of issues covered by that judgement.
