Raymond Atkinson v The Commissioners for HMRC

The form of the hearing was V (video). All who attended the hearing did so remotely by video, as did the Tribunal. The hearing was conducted using the Microsoft Teams platform. The documents to which we were referred were: a 214 page bundle of documents which contained Mr Atkinson’s Notice of Appeal and related correspondence, HMRC’s Statement of Objections and a 267 page bundle of legislation and authorities.

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.

 For the reasons explained in an ex tempore (verbal) judgment given at the end of the hearing and as set out below we refused Mr Atkinson’s application for permission to pursue a late appeal.

This is an application by Mr Atkinson for permission to pursue a late appeal of surcharges charged under Section 59C(2) and 59C(3) Taxes Management Act (“TMA”) 1970, in respect of the late payment of tax for the years ended 5 April 2009 and 5 April 2010, late payment penalties charged under Schedule 56, Finance Act 2009 (“Sch. 56 FA 2009”) in respect of the late payment of tax for the year ended 5 April 2011, and late filing penalties charged under Schedule 55 to the Finance Act 2009 (“Sch. 55 FA 2009”) in respect of the late filing of a Self-Assessment Tax Return for the years ended 5 April 2013 and 5 April 2014.

The 12 surcharges and penalties charged to Mr Atkinson which he seeks permission to appeal are as follows:

For clarity, the number given in the first column of that table is mentioned when reference is made to particular surcharges and penalties in this decision. Otherwise, where we refer simply to “the surcharges and penalties”, we mean all of them.

This decision is solely concerned with the question of whether permission should be granted to purse a late appeal of the penalties and surcharges listed in the above table.

To be entitled to bring an appeal before this Tribunal in respect of the surcharges or penalties Mr Atkinson first had to notify an appeal to HMRC within 30 days of the date that each surcharge or penalty was raised. 

An appeal may be given late to HMRC provided that Mr Atkinson could show: 1) that his request for the appeal to be accepted late has been made; 2) HMRC is satisfied that Mr Atkinson had a reasonable excuse for not giving the notice of appeal on time; and 3) HMRC is satisfied that the notice of appeal was given without unreasonable delay after any reasonable excuse ceased. 

In circumstances where Mr Atkinson had notified an appeal to HMRC and it has undertaken a statutory review of the relevant surcharges and penalties and decided to uphold them, Mr Atkinson had 30 days from the date of that decision to notify his appeal to the Tribunal.

Where HMRC refuses to accept a late appeal or Mr Atkinson has notified a late appeal to the Tribunal following a statutory review by HMRC, both of which has happened in this case, we may nevertheless give permission for the late appeal to be pursued by Mr Atkinson.

In the case of William Martland v HMRC [2018] UKUT 0178 (TCC) (“Martland”) the Upper Tribunal provided guidance on how we are to approach the matter of whether to give permission for a late appeal to be pursued. The starting point is that “...the presumption should be that the statutory time limit applies unless an applicant can satisfy the FTT that permission for a late appeal should be granted...” (paragraph 29). At paragraph 44 the Upper Tribunal then set out a three-stage process for us to follow to determine whether permission should be granted in these terms:

“When the FTT is considering applications for permission to appeal out of time, therefore, it must be remembered that the starting point is that permission should not be granted unless the FTT is satisfied on balance that it should be. In considering that question, we consider the FTT can usefully follow the three-stage process set out in Denton:

(1)

Establish the length of the delay. If it was very short (which would, in the absence of unusual circumstances, equate to the breach being "neither serious nor significant"), then the FTT "is unlikely to need to spend much time on the second and third stages" - though this should not be taken to mean that applications can be granted for very short delays without even moving on to a consideration of those stages.

(2)

The reason (or reasons) why the default occurred should be established.

(3)

The FTT can then move on to its evaluation of "all the circumstances of the case". This will involve a balancing exercise which will essentially assess the merits of the reason(s) given for the delay and the prejudice which would be caused to both parties by granting or refusing permission.”

Where Mr Atkinson says events occurred which are a reason or part of the reason why his appeal was made late it is for him demonstrate, on the balance of probabilities, that those events occurred.

A difficulty in this case was that most of the material events occurred many years ago, some more than 13 years ago, with the earliest surcharge (number 3) being imposed on 17 February 2012.

Most of the contemporaneous documents which would have existed had been lost or destroyed in the intervening years. Save for a few pieces of correspondence provided by Mr Atkinson which are mentioned below, the only other contemporaneous records to survive from the earliest years of relevance are electronic records which HMRC had kept of its contact with Mr Atkinson and his accountants.

We heard from Mr Atkinson. We had no reason to doubt his belief in the truth of what he told us and he admirably explained the many difficult events which occurred during some of the years in question. Inevitably though he had difficulty recalling details of many of the events from so long ago. We also heard from Ms Hownam, though she was only able to speak directly about more recent events.

During all the years of relevance to this appeal Mr Atkinson told us that continued to run his business.

Aside from the matters which triggered the issue of the penalties and surcharges Mr Atkinson appears to have been able to manage his tax affairs including filing self-assessment returns, paying tax he owed, contacting HMRC to agree time to pay arrangements and so on. He filed self-assessment returns for all the years in question. Mr Atkinson’s return for the year ended 05 April 2013 was filed late on 05 June 2014, just over 4 months late. His return for the year ended 05 April 2014 was filed late on 13 November 2015, about 9½ months late.

A letter dated 20 March 2019 sent by Mr Atkinson’s accountants, D Parsons Accountancy Limited, and intended to notify an appeal to HMRC of seemingly all the surcharges and penalties, explained Mr Atkinson’s position regarding his lack of awareness of the surcharges and penalties in these terms:

“I am writing on behalf of my client Mr RI Atkinson to appeal the penalties listed upon your recent communications with him for the years ended 5 April 2009 to 5 April 2014.

The basis for the appeal is as follows :

Mr Atkinson's' parents were both ill during the period in question and unfortunately both passed away in 2014 within weeks of each other. Mr Atkinson left everything with regards to submission to his pervious Accountant and was completely unaware of any late submissions until he heard from you recently. He has, to the best of his knowledge, received no penalty notices from you at all from that period until the recent raft of letters. Also he was not contacted by his old Accountant with any correspondence. In essence Mr Atkinson was not aware of any issues regarding his Self Assessment Returns until comparatively recently…”

“Mr Atkinson is aware that he was ultimately responsible for making sure that his Self Assessment was submitted on time however due to the very real stress of his ill parents he relied on his Accountant who he believed was submitting everything in a timely manner…”

We note that there is an inconsistency between the contents of this letter and the grounds of appeal given by Mr Atkinson in his notice of appeal to the Tribunal. This letter suggests that Mr Atkinson (and, we infer, D Parsons Accountants Limited) only became aware of the surcharges and penalties shortly before the letter was written. In contrast, in his grounds of appeal Mr Atkinson states:

“I was not aware of the debt from 2009 until it appeared on my accountants online system in 2014 for the first time. By this time it had accrued various interest, penalties and surcharges and the time frame to appeal had passed.”

Mr Atkinson’s grounds of appeal suggest that both he and his accountants had known of at least some of the penalties and surcharges since some point in 2014 i.e. around 5 years before D Parsons Accountants Limited wrote to HMRC on 20 March 2019 seeking to appeal them, which is plainly at odds with what is said in that letter.

Mr Atkinson was not cross-examined on this point by HMRC and we gave him the benefit of the doubt by treating his references to discovering the debt, penalties and surcharges in “2014” in the grounds of appeal as incorrect. We have taken the contents of the letter of 20 March 2019 as stating Mr Atkinson’s version of events i.e. that he only became aware of the surcharges and penalties shortly before that letter was written.

Regarding why Mr Atkinson had not received any correspondence from HMRC about these matters for many years he suggested that HMRC had continued to send such correspondence to an old address of his, 22 Front Street, Hetton Le Hole, Tyne and Wear DH5 9PF. Mr Atkinson explained he had operated a shop from that address until it closed in early 2011. As an example of HMRC correspondence sent to that address Mr Atkinson had produced two letters from HMRC. One is dated 13 July 2010 and the other 23 November 2010. Both concern VAT and show that HMRC was sending at least some correspondence to the 22 Front Street address before Mr Atkinson closed his shop at that address.

The other old piece of correspondence Mr Atkinson produced is a letter sent to him at the 22 Front Street address by his then accountants, Robert Miller & Co. This letter is dated 25 July 2011 and so it is apparent that at least some correspondence sent to that address in the months after Mr Atkinson had closed his shop in early 2011 was still finding its way to him, but we accept that post sent to him at that address after he closed that shop may well have not reached him.

In his notice of appeal and application for permission to make a late appeal Mr Atkinson gave his current address as The Gate House, Station Road, Rainton Gate, County Durham, DH4 6SF. Mr Atkinson said he bought this property at some time in the period 2000 to 2002 and it consists of a shop with a flat above it. He has owned this property ever since and for most of the time since he bought this property it has been his home.

Mr Atkinson struggled to recall the precise dates, but at some point he bought a property with the address Clairville, Durham Road, Houghton Le Spring DH5 8NF. This had been the home of his parents and he lived in it with his then wife and daughter for a time. He moved out of this property in about 2011 and returned to living at The Gate House address.

Mr Murphy took us to various documents being screenprints of what is recorded on HMRC’s computer systems showing the addresses which HMRC used to correspond with Mr Atkinson about his self-assessment returns and the surcharges and penalties. These show that on 16 April 2012 HMRC recorded Mr Atkinson’s address as The Gate House Flat, Gate House Stores, Station Road, Rainton Gate, Durham DH4 6SF. Subsequently, very minor typographical changes were made to the address recorded on HMRC’s systems, but the address used by HMRC for correspondence has remained materially the same since 16 April 2012. The same screenprints showed that before then HMRC had recorded Mr Atkinson’s correspondence address as Clairville, Durham Road, Houghton Le Spring DH5 8NF.

Mr Murphy acknowledged that the letters produced by Mr Atkinson showed HMRC had been sending correspondence to the 22 Front Street address as well, but pointed out that those letters concerned VAT and said that address must have been recorded on a separate HMRC computer system as the address to use for correspondence about VAT at the time those letters were sent in 2010. He submitted that the documents he had taken us to showed that the 22 Front Street address had never been used as an address to which correspondence should be sent to Mr Atkinson about his self-assessment tax returns and so no such correspondence would have been sent there.

Whilst HMRC was unable to produce a copy of any of the correspondence it had sent to Mr Atkinson in most of the years in question, either because it had been destroyed or no copy was kept in the first place, Mr Murphy and Mr Mason took us to the electronic records which HMRC had kept which they said showed that between 23 February 2012 and 3 October 2024:

Mr Murphy and Mr Mason said that all these statements and letters were sent to The Gate House address, being the correspondence address recorded on HMRC’s system during that time, and none of them had been returned to HMRC as undelivered.

The electronic notes which HMRC had kept of its contact with Mr Atkinson and his accountants over the years also show that on many occasions Mr Atkinson had contact with HMRC about tax he owed and at least some of the surcharges and penalties. By way of example, the notes record discussions Mr Atkinson had with HMRC by telephone on 27 April 2012 when he asked if the surcharges could be removed (page 182 of the bundle) and on 18 May 2012 (page 191 of the bundle).

Indeed, those electronic notes show that Mr Atkinson pursued an appeal or appeals of many of the surcharges and penalties which was unsuccessful. Note 7 on page 167 of the bundle appears to show that on 06 December 2012 an appeal was received from Mr Atkinson relating to the two surcharges imposed in relation to the tax year ended 05 April 2010. Notes 1, 2 and 3 on page 167 indicate some confusion about whether the surcharges for the tax year ended 05 April 2009 had also been appealed before concluding they had not been. The notes on page 168 appear to show that Mr Atkinson made a further appeal of the 3 late payment penalties for the tax year ended 05 April 2011. The notes are not entirely clear, but it appears that eventually both those appeals were passed to a reviewing officer on 28 August 2013. Note 2 indicates that on or shortly before 16 September 2013 the appeals were rejected by the reviewing officer who considered Mr Atkinson to have no reasonable excuse for the relevant late payments.

Unfortunately, no other records from 2012 and 2013 held by HMRC relating to those appeals have survived the passage of time having been destroyed at some point in the intervening years.

We asked Mr Atkinson whether he could recall making those appeals. Initially he said he could not, but when replying to HMRC’s submissions he said that he could vaguely remember making them, but he could not recall the details.

In light of the evidence before us we find that Mr Atkinson did receive the correspondence sent to him by HMRC. He was aware of all of the surcharges and penalties for many years before 20 March 2019 when D Parsons Accountancy Limited sought to notify an appeal to HMRC of those surcharges and penalties.

We also find that:

Through his correspondence with HMRC, his grounds of appeal and his testimony to us it was apparent that Mr Atkinson had the misfortune to experience a number of serious personal and business issues which he said are reasons why he was late in appealing the surcharges and penalties. In summary:

There was little in the way of documents to support what Mr Atkinson said to us and/or what is said in his written correspondence about most of these matters, but we had no reason to doubt his account of these events. Plainly many of these events and/or several of them in combination could have constituted very good reasons for some periods of the delay in support of his appeals against the surcharges and penalties. However, we do not consider it was necessary for us to analyse each of these individually or in combination in great detail and make precise findings about whether they do amount to reasons for the delay and for which periods of time in order to determine this appeal.

Regarding Mr Atkinson’s assertion that D Parsons Accountancy Limited did not discover the outstanding surcharges and penalties until some years after he instructed them, we refer to our findings above that Mr Atkinson did receive the correspondence sent to him by HMRC or certainly enough of it to be well aware of all of the surcharges and penalties from when they were issued and for many years before 20 March 2019 when D Parsons Accountancy Limited sought to notify an appeal to HMRC of those surcharges and penalties. Accordingly, if D Parsons Accountancy Limited were unaware of those surcharges and penalties, Mr Atkinson cannot have shown them the correspondence he had received from HMRC and also failed to inform them about the surcharges and penalties or about the appeals he had previously submitted to HMRC which had been rejected.