In a recent case, which was heard at the First Tier Tribunal Tax Chamber, Mrs. Hanaah Chattun successfully challenged financial penalties imposed upon her by HMRC for the late completion of tax returns.

Sukhdip Randhawa of Kangs Solicitors comments upon the events.

The Circumstances| Kangs Tax Appeals Advisory Solicitors

  • Through her accountants, Mrs. Chattun raised enquiries with HMRC to clarify certain issues concerning her self-assessment status.
  • HMRC records show that blank tax returns were issued to Mrs. Chattun although she claims never to have received them.
  • As HMRC received no response from Mrs. Chattun, various financial penalties were imposed against her.

The Issues | Kangs Tax Investigation Solicitors

  • Chattun denied that she was liable for the penalties as she had not received the relevant penalty notices.
  • The responsibility was for HMRC to prove liability for the penalties and, in order to do so, it had to prove that Mrs. Chattun had received the communications it had sent her.

The Applicable Law | Kangs Tax Offences Defence Solicitors

Interpretation Act 1978:

Section 7 provides:

‘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’.

Accordingly, provided that HMRC could prove that the communications which had been submitted had been sent out, the obligation would be for Mrs. Chattun to prove that they did not arrive.

The Tribunal Hearing and Decision | Kangs Financial Offences Defence Team

  • The Tribunal heard that HMRC had used automated systems.
  • Whilst nobody could give evidence of the letters having been posted, the Tribunal accepted that the HMRC system seemed to work with a great volume of post being delivered to numerous individuals.
  • On this basis it was considered that a prima facie case existed against Mrs. Chattun but, as she had denied receipt, the Tribunal had to consider the credibility of her evidence.
  • The Tribunal concluded that Mrs. Chattun was a credible witness, who would not act in an inconsistent and irrational manner, and would not ignore the letters that HMRC submitted to her as she knew that, as the result of submitting the required returns, she would not be liable for tax in any event.
  • The Tribunal concluded that HMRC had failed to prove that the various letters had been sent, the appeals were allowed and the penalties were discharged.

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