In Khan Properties Ltd v HMRC [2017] TC06225, the FTT held that when a section 100 TMA determination is made it cannot be made by a computer or by an officer who is not authorised.
Section 100(1) TMA requires that: “… an officer of the Board authorised by the Board for the purposes of this section may make a determination imposing a penalty under any provision of the Taxes Acts and setting it at such amount as, in his opinion, is correct or appropriate.”
Khan appealed against a late filing penalty on the basis that they had relied on their accountant, who had been delayed by the “sudden withdrawal” of HMRC’s corporation tax software and thus had a reasonable excuse for filing late.
The First Tier Tribunal (FTT) decided that s100(1) TMA requires a flesh and blood human being who is an officer of HMRC to make the assessment, that is to decide to impose the penalty and give instructions which may be executed by a computer (s 113(1D) TMA).
That officer should be named in the notice otherwise the recipient will not know to which officer to address the appeal as required by s 31A(1)(c) TMA.
- No name appeared on the notification of penalty (“unless it is a Mr or Ms C.T. Services, which seems unlikely”)
- HMRC also provided an excerpt from the manual for their computer systems showing it issued penalties automatically.
- HMRC had failed to show it had met the requirements of s100.
In the alternative, Khan had a reasonable excuse.
- This was the first failure by their accountant, so Khan had no reason to check that they had done their job.
- The tax was paid on time so clearly Khan had supplied the relevant information to their accountants in good time.
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