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Ground 1
Ground 1
Firstly, the FTT did not arguably err in finding that that HMRC made no clear or unambiguous statement that the filing date for online returns was extended from 31 January to 28 February 2021. This is for the reasons set out at [31]-[38] of the Decision. HMRC’s correspondence neither arguably extended the deadline nor gave rise to any arguable legitimate expectation that they had done so. HMRC’s correspondence merely stated that late filing penalties would not be charged so long as taxpayers filed their returns online by 28 February 2021. That was in no sense a statement that the filing deadline would be extended – merely that penalties would be not be applied until after 28 February 2021. Further the correspondence made clear that payment was still required to be made by 31 January 2021 with interest charged from 1 February 2021. While the FTT correctly observed that filing and payment deadlines are not linked (see [25]-[26]), it was some further indication that all HMRC were explaining in their correspondence was that they were suspending the charging of penalties for a month rather than extending the deadline for filing.
There is nothing explicit within HMRC’s correspondence which states the filing deadline was extended – nor is it obviously or clearly implied. The correspondence only informs the taxpayer that the consequence of the otherwise applicable late penalties was relieved or suspended for a month. At its highest the Applicant’s case might rest on the phrase in HMRC’s email which states: “We are still encouraging customers to file by 31 January, if they can” which might imply, without expressly stating, that the deadline had been extended. However, that interpretation is not arguable on an objective reading when the phrase is read in context:
“Earlier this week, HMRC announced that customers will not receive a late
filing penalty for completing their 2019-20 tax return after 31 January, as long
as they file online by 28 February.
We are still encouraging customers to file by 31 January, if they can, as this
will help to budget and plan for your January payment.
You'll still need to pay your Self Assessment tax bill by 31 January.
Interest will be charged from 1 February on any outstanding liabilities…”
The FTT’s conclusion at [37]-[38] is therefore unimpeachable and without arguable error:
“37. I note the following from the emails:
(1) the due date or filing date for the return is not expressly referred to as such in the
email at all.
(2) There is not a statement, as there was for payment, that the due date for filing
remains 31 January.
(3) There is also not a statement that the due date for filing has been extended to 28
February.
(4) The first email “encourages” filing by 31 January but this is expressed specifically
as being helpful for the purposes of helping budget and planning for the payment due on 31 January.
38. I do not consider that the emails were clear and unambiguous in providing an extension or change to the filing date. The concessions made in the emails relate to penalties rather than the filing deadline itself.”
The FTT made no arguable error in deciding that, as a matter of fact, HMRC had not extended the deadline to 28 February 2021 for online returns for all taxpayers by virtue of the correspondence they sent.
Section 118(2) TMA 1970 provides as follows:
“For the purposes of this Act, a person shall be deemed not to have failed to
do anything required to be done within a limited time if he did it within such
further time, if any, as the Board or the tribunal or officer concerned may have
allowed; and where a person had a reasonable excuse for not doing anything
required to be done he shall be deemed not to have failed to do it unless the
excuse ceased and, after the excuse ceased, he shall be deemed not to have
failed to do it if he did it without unreasonable delay after the excuse had ceased.”
The FTT stated at [41]:
“41. Ms Hayes argues that the decision on section 118(2) is obiter dicta because it was not determinative of the case. However, Richards LJ expressly states, in paragraph 52 of his judgment that the issue arising under section 118(2) forms part of the ratio of their decision. He also recognised that the interpretation issue has wider ramifications beyond the scenario concerned in Raftopoulou. For the same reason, I do not consider that Raftopoulou can be distinguished purely on the grounds that it was dealing with a taxpayer claim rather than a self-assessment filing deadline.”
The FTT made no arguable error in deciding that the judgment at [67]-[68] of Raftopoulou was part of the ratio (see [52] of the judgment), applied to the Applicant’s case, and could not be distinguished such that s.118(2) did not empower HMRC to grant a general extension to the statutory deadline under the TMA for filing a return. This is for the reasons explained by the Court of Appeal in Raftopoulou at [66]-[70]:
Second, the deeming effect of the second part is of central importance. It does not deem anything to have been done, either within a time limit or at all. It provides only that the person in question shall be deemed "not to have failed to do it". It relieves the person of the consequences of failing to do the thing, which in the context of the TMA 1970 is a financial penalty, but does not go further and provide the benefits of having in fact done the thing which the person has failed to do. I do not accept Mr Thomas' submission that it is the necessary corollary of a provision that a person is deemed not to have failed to do an act that he is deemed to have done that act. The one does not necessarily lead to the other, particularly where the consequences of the two are potentially very different, as is the case where a deemed non-failure will avoid a penalty, but a deemed performance will secure a benefit. As Peter Gibson J (giving the only reasoned judgment of this court) said in Marshall v Kerr (1995) 67 TC 56 at 79, when considering the correct approach to the construction of deeming provisions, "because one must treat as real that which is only deemed to be so, one must treat as real the consequences and incidents inevitably flowing from or accompanying that deemed state of affairs, unless prohibited from doing so" (emphasis added).
Looking at the context of TMA 1970 as a whole further supports, in my judgment, the construction of section 118(2) for which HMRC contends. Although many of the mandatory requirements formerly contained in TMA 1970 have been re-enacted in other legislation, it still contains a number of such provisions. Section 118(2) has a clear purpose to serve in relieving taxpayers of the consequences of failing to comply with those requirements in circumstances where the conditions for the application of the deeming provisions of the sub-section apply.
TMA 1970 also contains a number of time limits, including those in schedule 1AB. In some cases, those time limits are coupled with provisions enabling them to be extended. The UT suggested that in such cases the general effect of section 118(2) would cede to the conditions of the particular provision in question. That is a sensible reading of such provisions if it is assumed that section 118(2) has the general effect of extending time. However, it fails to take account of the improbability of specific time extension powers and a general time extension provision co-existing in the same enactment when the general provision contains no clear indication that it is indeed to take effect as a time extension provision. In other words, the presence of the specific provisions tells against section 118(2) having any time extension function at all. If section 118(2) had been intended to have this effect, it is likely in my judgment that it would have been clearly stated.
…
I accept the submission of Ms McCarthy and Mr Stone that Parliament has set down in the self-assessment system carefully defined time limits for enquiries, assessments and claims which balance the need to give finality and certainty to taxpayers and the Exchequer, with the need to provide sufficient flexibility to ensure fairness in the system. It has created a specific statutory procedure for the extension of certain of those time limits where it has considered it appropriate. The UT's construction cuts across this balance without a clear warrant for doing so in the section.
Therefore, the Applicant’s central proposition is not arguably correct and Raftopoulou cannot be arguably distinguished on the basis that it concerned making a claim out of time for repayment rather than filing a late return. The Court of Appeal at [68] made clear that section 118(2) does not have ‘any time extension function at all’ in relation to any time limits set by the TMA, which include filing deadlines. Further, the first phrase of Section 118(2) only deems a person not to have failed to do anything by a time limit if they have done it within such further time as HMRC may have allowed. As above, HMRC did not arguably extend the 31 January deadline or allow that returns filed by 28 February 2021 would be filed on time, they simply relieved the taxpayers of the consequence of penalties for late filing for the first month between 31 January and 28 February. The only consequence of late filing which was relieved or cancelled was the imposition of penalties – not the statutory filing deadline nor the extended enquiry window for late returns available to HMRC.
Further, and in any event, the FTT did not arguably err in deciding that even if the Applicant could be deemed not to have failed to file her return on time by virtue of an extension granted, this did not mean that she could be deemed to have filed her on return on time for the purposes of the time limits for opening enquiries (see [50]-[52]).
This ground of appeal is not arguable and is dismissed.