Income tax – Accelerated payment notice – Penalty for non-payment – APN specified two different payment amounts – Appeal allowed – FA 2014, Pt. 4, Ch. 3 - TMA 1970, s. 114, 115 - FA 2009, Sch. 56, para. 9 – 18
In Pitcher  TC 05870, the First-tier Tribunal (FTT) cancelled a penalty charged for the non-payment of an accelerated payment because the accelerated payment notice (APN) specified two different payment amounts.Summary
The appellant appealed on the grounds that:
The FTT found that the APN was sent to the appellant by post at his last known place of residence, and that it was delivered to that address. It followed that it was duly given in accordance with TMA 1970, 115.
The FTT found that it had no role in deciding whether the circumstances for the valid issue of an APN were satisfied. Such matters had to be addressed by representations under FA 2014, s. 222 and/or judicial review proceedings (as observed in Nijjar  TC 05667).
As put beyond doubt in the Supreme Court in R & C Commrs v Cotter  BTC 837, the FTT found that there was no right to have a claimed repayment from an earlier year set off against the accelerated payment in a situation where the return giving rise to the claimed repayment was still under enquiry. On similar grounds it would have been entirely inappropriate for credit against an accelerated payment to be given for the loss claimed by the appellant without that claim being made good.
The FTT found that the appellant had no reasonable excuse for not paying. As the stated reason for not paying was an insufficiency of funds the tribunal had to decided whether that insufficiency was attributable to events outside the appellant's control. As the underlying reason was the appellant’s conviction, imprisonment and related consequences the FTT decided, however harsh it might have seemed, that these events were attributable to the appellant’s own conduct and were therefore not outside his control.
The FTT found that the different amounts in the APN meant that HMRC had not specified ‘the payment required to be made’ making it impossible for the appellant to ascertain with certainty the amount of the accelerated payment required to be paid. That meant that HMRC could not identify the amount to be used in any penalty calculation and they had therefore deprived themselves of the ability to charge a penalty for failure to pay. The FTT also found that TMA 1970, s. 114 (which enables assessments not to be invalidated because of want of form or errors) could not assist HMRC in this situation.
The FTT accordingly decided that HMRC’s decision that a penalty was payable was unsustainable and accordingly HMRC’s decision to impose a penalty had to be cancelled pursuant to FA 2009, Sch. 56, para. 15(1).Comment
However, it was because HMRC had included two different payment amounts in the APN that meant that the penalty had to be cancelled. The appellant had been left in an impossible position of not knowing how much he had to pay to avoid a penalty and HMRC could not identify the amount to be used to calculate any penalty.
For commentary on accelerated payments and the penalties for failure to pay accelerated payments, see the CCH Tax Reporter at ¶ 192–765.