In The Personal representative of Mark Collins v HMRC [2018] TC06597 the First Tier tribunal allowed executors to appeal discovery assessments issued to the deceased; the appeals were nearly four years late.
Appeals against Discovery assessments under s29 TMA 1970:
- Must be made within 30 days of the date the assessment is issued
- Late appeals are allowed by s49 TMA:
- where the taxpayer has a reasonable excuse and
- where the taxpayer did not make any unreasonable delay in making the appeal once whatever produced the reasonable excuse had passed.
- If HMRC refuse a late appeal, an appeal can be made to the tribunal.
Mr Collins had a buy to let property portfolio comprising over 50 properties.
- In March 2013 HMRC opened an enquiry into Mr Collins’ affairs under COP9.
- In August 2013 Mr Collins died suddenly without a will. His family had no involvement in his business and had great difficulties in dealing with it after his death. His wife (the appellant) was only appointed as personal representative when probate was granted in July 2015.
- In autumn 2013 a litigious claim was made against the estate for £223,000; this caused the family much concern but and was resolved in their favour in December 2014.
- In December 2013 HMRC issued assessments totalling £326,000. The total due to HMRC from the estate increased under debt management litigation to £444,475. The net value of Mr Collins’ estate for probate was £714,480.
- The appellant, her son (an accountant) and their solicitors corresponded with HMRC between 2014 and 2016 about the appeals and tax debts.
- Protective appeals made in September 2017 were rejected by HMRC.
The FTT followed the guidance on the principles for dealing with a late appeal set out in Martland, see Late appeals, subscriber guide. It decided that the balance of prejudice followed the appellant:
- Reasons for the default:
- There was a reasonable excuse for the delays until the litigation was resolved and probate granted but no explanation for the continuing delays thereafter.
- The litigation case justifiably caused the family to “take their eye off the tax assessment ball” and Mark Collins’ secrecy about his business affairs had made it very difficult for the family.
- Length of delay: The appeals were very late and this was serious. Had appeals been made in 2015 they would have been stood over whilst more information was gathered. This lessened the significance of the delay; finality would probably not have been possible until 2017.
- The balancing exercise:
- The appellant was denied the right to look behind the £444,475 judgement debt; the tribunal itself was unable to understand where this figure came from.
- The documentation suggested that the appellant had good grounds on which to challenge the assessments.
- The financial implications to the estate of a debt of over £444,000 was very significant in both absolute and relative terms compared to assessments of £326,000.
- It doesn't take long or cost much to draft a protective letter of appeal and send it to HMRC.
- Granting the application would involve HMRC in doing little more work than if the appeal been on time.
The judge was clear that this was a very very finely balanced situation. He said the tribunal were mindful that if the application were granted "it would send out a message to taxpayers that it is acceptable to ignore deadlines regardless of the merits of the excuse", however in the tribunals view the balance of prejudice weighed very heavily in favour of the appellant and just (and only just) outweighed the seriousness and significance of the delay in making the appeal and the lack of explanation as to why it was made so late.
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The Personal representative of Mark Collins v HMRC [2018] TC06597
