Mohammed Salem Kadhem v HMRC (FTT- TC05929 - 06 June 1977) 

HMRC have long been aggressively pursuing company directors to file their tax returns regardless of whether the director had any income from the company and had tax payable. This interesting clearly establishes that HMRC guidance is definitely not the law nor does it reflect the law accurately at least in this matter. 

Facts: 

Mr Kadhem was appointed a director of Tadmor Property Services Ltd on 27 May 2014 and he submitted his tax return for 2014-2015 electronically on 21 September 2016 after he received a penalty statement for failure to file his SA personal tax return. Mr Kadhem argued that he never received a notice to file a tax return. HMRC argued that as a director he should have registered for self-assessment and filed a return and that he was required to do so without any prompt or encouragement from HMRC. The appellant argued he received no notice to file a return and therefore, had no obligation to file a return. On that basis he had a reasonable excuse for failing to file the return on time. 

However, the interesting aspect of this case was the HMRC’s argument that ‘as a company director one of the appellant’s responsibilities is to register for self-assessment and send a personal self-assessment tax return each year without prompt or reminder from HMRC’. 

Decision: 

The FTT ruled that the taxpayer had a reasonable excuse for filing of his tax return late on the basis there was no evidence to suggest the appellant had received a notice to file a return. 

In relation to the other argument, the Tribunal did not agree with HMRC’s contention that as a company director one of the appellant’s responsibilities was to register for self-assessment and send a personal self-assessment tax return each year without prompt or reminder from HMRC. The Tribunal did not find anything in s.8(1) of the Taxes Management Act 1970 which supported HMRC’s view, despite guidance on Gov.UK website suggesting otherwise. 

The appeal was allowed!

 

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