Hoar Cross Parish Council v Commissioners for Her Majesty's Revenue and Customs

Facts

Hoar Cross Parish Council, the appellant, employed staff and was accordingly required to file an employer's annual return, form P35, for the tax year 2009/10. Under regulation 73(1) of the Income Tax (Pay As You Earn) Regulations 2003 that return had to be delivered to HMRC before 20 May following the end of the tax year, and for 2009/10 online filing was mandatory. HMRC's records showed no online submission until 15 September 2010, and on 20 September 2010 a penalty determination was issued. The statutory penalty of £400 (calculated at £100 per month under section 98A of the Taxes Management Act 1970) was mitigated to £206, the total of the PAYE, National Insurance and student loan deductions for the year. The council's case was that its clerk had submitted the return online in good faith before the deadline and that a malfunction in HMRC's systems must have prevented its capture; the clerk recalled a message appearing on screen confirming successful submission, though she could not say whether any automated acknowledgement was received. An internal HMRC review dated 10 January 2011 upheld the penalty, and the council appealed to the First-tier Tribunal by notice dated 8 February 2011. The appeal was determined on the papers without a hearing.