A special commissioner decided that penalties of £35 a day were appropriate where the sums involved had been outstanding for six years and the correct procedures to impose the penalties had been followed.

Facts

The taxpayer, who carried on business as a painter and decorator, appealed against the imposition by the Revenue of daily penalties at the rate of £35 per day under TMA 1970, s. 93 for the continued failure to submit tax returns in respect of the years 1998–99, 1999–00 and 2000–01. The general commissioners had on 14 November 2005 decided and directed that daily penalties of up to £60 a day should be imposed on the taxpayer for his failure to make returns for the years in question. On or before 6 December 2005 the Revenue decided to impose daily penalties for the 14 days, 22 November 2005 to 5 December 2005, at the rate of £35 per day, and the Revenue notified the taxpayer accordingly. The penalties amounted to £490 (£35 X14) for each of the outstanding returns.

The taxpayer submitted that the amount of the penalty at £35 per day was too much to be fair in all the circumstances including the fact that he had moved house three times which had made it hard for his representative to obtain the relevant information; the taxpayer had been involved in a big project at the time which had gone ‘sour’; it had taken a long time to obtain information from the bank; the Revenue had told the taxpayer's representative that an unlimited extension of time would be given to produce the returns before daily penalties would be invoked and that had not been honoured. In those circumstances, only a nominal amount should have been imposed by way of penalty.

The Revenue submitted that the returns in question had not been submitted by the due date. They had been outstanding for more than six years. The correct procedures to impose the penalties had been followed. The explanation of how the amount of the daily penalty had been arrived at showed careful and reasonable consideration of all the circumstances to reach an appropriate conclusion. Accordingly, the amount of the penalty was appropriate and the appeal should be dismissed.

Issue

Whether the amount of the penalty was appropriate.

Decision

The special commissioner (Adrian Shipwright) (dismissing the appeal) said that the Revenue had considered all the circumstances in deciding that £35 per day was the appropriate level of daily penalty. In particular the Revenue officer had considered the amount of tax at stake, the number of returns outstanding, the time from the due date, the number of times the returns had been said to be about to be filed, the correspondence and the whole history. He also took into account that duplicate records were sought and all the other information available to him.

Those were the right matters to take into account in the circumstances of the case. A penalty of £60 per day would not be appropriate in the circumstances of this case. A nominal penalty would not be appropriate in the circumstances. A penalty of £35 per day, some 58.3 per cent of the maximum, did not seem inappropriate and it was appropriate in all the circumstances of the case. Accordingly the determination was confirmed.

(2007) Sp C 590.
Decision released 7 February 2007.