A partnership tax return for the year ending 05 April needs to be filed on or before the following 31 October if a paper return and on 31 January if filed online. Whilst HMRC does provide online software for individuals and companies it doesn’t provide one for filing the partnership returns. This has been the case for quite some years and it’s a well-known fact, at least among tax agents and advisors. Here we examine a few recent cases decided by the First-tier Tribunal on whether not providing an online filing facility constituted a reasonable excuse for filing a return late.
TC01693 – 20 December 2011 – appeal dismissed
This was an appeal against late penalty on the partners of a partnership firm for filing the income tax return late for the year ended 5 April 2010. HMRC issued the return for the year to the appellant partnership on 6 April 2010. The filing date for a paper return was 31 October 2010 and 31 January 2011 if filed online. The paper return filed by the appellant was received by HMRC on 24 January 2011. The penalty notice was issued on 15 February 2011 as the paper return was submitted late, beyond the deadline of 31 October 2011. The appellant’s agent put forward various grounds of ‘reasonable excuse’, one of them being that HMRC website didn’t provide the online service for filing a partnership’s tax return. HMRC contended that the front of the return issued to the appellant for completion clearly stated that if the partnership wished to file the return, commercial software must be purchased from the market. The tribunal dismissed the appeal.
TC01683 – 19 December 2011 – appeal allowed
Again, this was an appeal against late penalty for filing the partnership tax return for the year ended 05 April 2010. The paper return filed by the partnership was received by HMRC on 1 February 2011, well after the deadline of 31 October 2010. HMRC did not reject the paper return nor did it insist on an online filing but demanded a penalty for late filing on 15 February 2011 of £100 in respect of each partner. The partnership, in filing its return, was assisted by an unpaid volunteer, a gentleman of 83 years of age, who attempted to file the partnership tax return online just prior to 31 January 2011. The appellant, used to filing paper returns, apparently did not know that it would be faced with an inability to file online by HMRC’s failure to provide online filing facility for partnerships and that a commercial software from a 3rd party would be required. By the time the appellant became aware of it, it was too late to set up an online filing facility as that would have required both, a registration and a password as well as a third- party software. As the appellant was unable to file online, the partnership tax return was filed on paper, was received and accepted by HMRC on 1 February 2011. HMRC’s failure to provide online facility for partnerships was allowed as a reasonable excuse in this case for late filing of the return and the appeal was allowed.
TC01445 – 15 September 2011 – appeal dismissed
Once again the appellant, a partnership firm, filed a paper tax return on 31 January 2011, well beyond the deadline of 31 October 2010. The appellant’s ground of appeal was that the agent was a small agent with two partnerships and it was not economically viable for the agent to have purchased a commercial software in order to submit partnership returns online. HMRC argued that the appellant could not have transferred or removed its responsibility to file a return on time by engaging a representative and that the agent could even have submitted a paper return by 31 October 2010. The appeal was dismissed.
