17-Mar-2011
HMRC’s stance on postal tax return submissions suffered a blow from First Tier tribunal judge Ann Redston, who last month upheld a taxpayer’s appeal on a CIS return late filing penalty.
The Heronslea v HMRC appeal stemmed from a CIS return due on 19 June 2010 that HMRC claimed did not arrive until 22 June. Heronslea director Michael Clifton appealed the £100 penalty and told HMRC he had posted the return (along with other documents) in good time because he was going away on holiday.
“We are a small company and to us £100 is a lot of money. Why should we risk paying this by the late sending in of Returns. We always send them in well in advance. Is the post to blame? Your ‘Charge Notice’ took ten days to reach us,” he argued.
Heronslea had a string of previous late filing penalties that had been overturned and HMRC’s Appeal Review Unit pointed to an “education letter” it sent the firm in May advising that first class post was “insufficient” to guarantee delivery and that the taxpayer should obtain proof of posting.
But proof of posting is not a legislative requirement. “Where such proof is provided, it is conclusive; in its absence, the Tribunal must, as here, weigh up the evidence provided. But obtaining proof of posting is not a legal obligation and HMRC cannot insist upon it. As Mr Clifton says, it can be an onerous requirement, particularly for a small business with extended working hours,” the decision noted.
The Tribunal determined that section 7 of the Interpretation Act 1978 applied in this instance. The legislation states where a document is to be served by post, “Then, unless the contrary intention appears, the service is deemed to be effected by properly addressing, pre-paying and posting a letter containing the document and, unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post.”
Her decision took “judicial notice” of the fact that first class post normally arrives, if not the next day, at least by the day after that, so a letter posted first class on 14 June could thus be expected to arrive on or before 16 June - so Heronslea’s return was deemed to be delivered in the normal course of post unless HMRC could rebut that presumption.
The department failed to do so - for example by providing documentation such as a date-stamped CIS return or computer print-out showing the date of receipt, or evidence detailing the HMRC office’s procedures for opening and logging post. As a result, the tribunal upheld Heronslea’s appeal.