James Marshall v The Commissioners for HMRC

The form of the hearing was V (video).

The documents to which we were referred were a bundle of 393 pages.

Prior notice of the hearing had been published on the gov.uk website, with information about how representatives of the media or members of the public could apply to join the hearing remotely in order to observe the proceedings. As such, the hearing was held in public.

This appeal concerns a penalty for failure to comply with an information notice.

The appellant, Mr Marshall, did not attend the hearing.

In the days prior to the hearing, HMRC contacted Mr Marshall, copying in the Tribunal, noting that Mr Marshall had paid the penalty under appeal and querying whether he intended to proceed with the hearing.

The Tribunal emailed Mr Marshall (to the email address included with the Notice of Appeal) directing him to confirm whether he intended to proceed with the appeal. The email received an automatic reply from Mr Marshall which simply stated “We are currently away with no access to email”. There was no other means of contact provided in the automatic reply.

The Tribunal had had the same response to an email sent a month earlier (9 June), but not to the email sending the notice of the hearing or joining details for the online hearing (sent on 24 and 27 June). The Tribunal noted that the Appellant had not engaged with any communications sent from the Tribunal since the Notice of Appeal was submitted.

HMRC confirmed at the hearing that they had not had any further communication from Mr Marshall.

Our first question therefore was to consider whether we should proceed with the hearing in his absence under Rule 33 of the Tribunal Procedure Rules (the Rules).

The considerations we took into account were:

We considered that it was in the interests of justice and in accordance with the overriding objective to proceed with the hearing as this approach was proportionate to the importance of the case and the complexity of the issues, allotted an appropriate share of the Tribunal’s resources to this appeal and avoided delay, in accordance with Rules 2 and 33 (b) of the Rules. Accordingly, we decided to proceed in the Appellant’s absence.

The notice of appeal was submitted to the Tribunal late. It was submitted on 25 July 2024, appealing against a review conclusion letter that was issued on 5 June 2024.

HMRC do not object to the lateness of the appeal.

We also note that Mr Marshall had attempted to submit an in-time appeal on 4 July 2024 but had made a mistake as to the attachment to the notice of appeal and it had been rejected by the Tribunal on 19 July 2024. Therefore the late appeal was the re-submission of the original appeal with the right attachment. This was explained in the notice of appeal, as is required.

We also note that HMRC had, after the appeal was submitted, notified Mr Marshall that there had been an irregularity with the statutory review process and therefore the review letter received had in fact been erroneous.

Given the delay was short, the explanation was made clear and the respondents do not object, we decided to proceed to consider the substantive appeal.

The power for HMRC to obtain information and documents from a taxpayer is set out in paragraph 1 of Sch 36 to Finance Act 2008. It provides (so far as is relevant):

The relevant penalty provisions are to be found in paragraph 39 of Sch 36.

Paragraph 39 provides (so far as is relevant):

Paragraph 45 provides that a person is not liable if they have a reasonable excuse for the failure to comply.

Paragraph 46 sets out the requirements for a valid assessment and notification of a penalty as follows:

The extension on under paragraph (3) only applies where the person has appealed against the information notice, which is not relevant in this case.

Paragraph 47 provides that a person may appeal against the imposition of a penalty under paragraph 39.

Paragraph 48 states that, on an appeal against a fixed penalty, this Tribunal may confirm or cancel the decision.

The delivery and service or documents is provided for in section 115 of the Taxes Management Act 1970, which provides:

We heard the evidence of Officer Camilla Rudge.

We also had documentary evidence in the bundle.

We find the following facts based on that evidence.

Camilla Rudge is an HMRC officer with 22 years of service, currently working as an Investigation Lead in the Enablers Operations Team since 1 September 2021.

James Marshall is under investigation by HMRC as a suspected enabler of a Stamp Duty Land Tax (SDLT) avoidance arrangement involving a subsale and annuity.

He is under investigation because HMRC believe that he was part of Mayfair Tax Consultants (“Mayfair”), which HMRC considers to have been a promoter of that scheme.

The status of Mayfair is unclear:

On the balance of probabilities, we find that it was a partnership between Mr Marshall and Person 1 and Person 2.

HMRC obtained an address for Mayfair from invoices obtained through an investigation into another entity involved in the SDLT scheme.

HMRC issued an enquiry letter to Mayfair at that address and, having had no response, then issued an Information Notice under Schedule 36 to FA 2008 to Mayfair at the same address. These letters were addressed to “The Directors, Mayfair Tax Consultants”. No individual names were included.

After the issue of the information notice, the enquiry letter was returned unopened to HMRC.

James Marshall was identified as an authorised signatory on the Mayfair Tax bank account via an identification information notice issued to the bank operating the account (the Bank).

On 14 November 2023, HMRC issued a covering letter and an information notice (the Notice) requesting documents by 14 December 2023.

The Notice was addressed to Mr Marshall’s residence, which was also the address listed by Mr Marshall in his Notice of Appeal.

The Notice was addressed as follows:

James Marshall did not respond to the Notice.

HMRC issued a £300 initial penalty for failure to comply with the Notice on 28 December 2023. The Penalty notice was addressed in exactly the same format as the Notice.

On 19 January 2024, James Marshall contacted HMRC by email, stating he had returned the 28 December 2023 letter as “addressee not known” “as this was addressed to myself, [Person 1 and Person 2] and Mayfair Consultants.” He went to state that “This does not relate to me as I am not a partner of Mayfair Consultants which I retired from/left in approx. early to mid 2017”.

In February 2024, HMRC responded to this email requesting both for agreement to correspond by email and sending a letter explaining their position as to the addressees of the letter and requesting evidence of the partnership and his departure from it.

HMRC obtained further records from the Bank which included copies of cash withdrawals made from the Mayfair bank account through to the beginning of 2018.

James Marshall appealed the penalty to HMRC and requested an independent review, which upheld the penalty on 5 June 2024.

We summarise Mr Marshall’s grounds of appeal from his Notice of Appeal:

HMRC submits that:

HMRC submits that the documents requested were within the Appellant’s possession or power, and that he has not advanced any reasonable excuse for non-compliance within the meaning of paragraph 45 of Schedule 36.

The Respondents further argue that the Appellant’s assertion regarding improper service is unfounded, as both the information notice and penalty notice were addressed to “James Marshall” and sent to his last known address.

There is no dispute here that Mr Marshall has not complied with the information notice in question and therefore, subject to the point in dispute, would be liable for a penalty for that failure. Mr Marshall has not raised any arguments concerning whether the documentation in the information notice was outside of his possession or power.

There also appears to be no dispute as to whether the penalty notice was issued within the time limit. HMRC rely on the Hanan to support the conclusion that the question of time limits is determined at the date of issue. Mr Marshall did not put forward any arguments as to why we should not follow that decision. We are bound to follow the decision in Hanan¸ and find that the time limits for issuing the penalty notice were met.

The fundamental dispute here is a narrow one concerning how letters sent to Mr Marshall’s home were addressed and the impact of the form of words used.

There is no dispute here that the geographical address used for the correspondence sent in November and December 2023 was the correct address for Mr Marshall’s home.

Mr Marshall has also acknowledged on more than one occasion that letters were received at his home, but not opened and returned to HMRC. Some, but not all, of this returned correspondence was received back into HMRC.

The key correspondence in question was addressed in the same manner, as set out in paragraph 41 above.

Mr Marshall is arguing that the presence of his name amongst the names of two other individuals and the name of a trading entity meant that these letters were mis-addressed. Further, he argues that the form of address meant that he was actually prevented from opening the correspondence because he had no right to open post that was addressed to Mayfair. This was on the basis that he had resigned/retired from involvement with Mayfair.

HMRC relies on section 115 of TMA 1970 to support their position, arguing that the notices were sent to the last known address and this is sufficient.

We agree that sending to the last known address as the location for delivery is adequate to meet the requirements under section 115 of TMA 1970.

The question Mr Marshall seems to be putting is whether the names included above the geographical address are enough to support his conclusion that he did not receive the notices and whether he was justified in sending them back unopened.

There is a span of potential answers here. If the letters had been addressed to ABC Limited, a company with which Mr Marshall had never had any involvement or a Mr Smith, then Mr Marshall could, reasonably, have concluded that something had gone awry in the administration of these letters and could have returned them unopened to HMRC, who would then have been on notice that something had gone wrong.

That is not the factual circumstance we are dealing with. Instead we are dealing with a letter:

We find that it was not a reasonable course of action for Mr Marshall to treat a letter addressed in this way as if it was not addressed to him. To accept that position would allow a taxpayer to wilfully turn a blind eye to important correspondence from the HMRC.

HMRC investigate tax periods other than the current tax year as a regular part of their operations. The name Mayfair Tax Consultants was not a compete mystery to Mr Marshall. He had previously worked as part of Mayfair and the information being requested related to a period, for at least a part of which, he had been working for Mayfair.

We conclude that it was not fair or reasonable for Mr Marshall to return the letter enclosing the information notice, nor the letter issuing the penalty, unopened. They were appropriately addressed to him personally.

We therefore uphold the penalty.

This document contains full findings of fact and reasons for the decision. Any party dissatisfied with this decision has a right to apply for permission to appeal against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009. The application must be received by this Tribunal not later than 56 days after this decision is sent to that party. The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice.