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Jack Dyson v HMRC

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In Jack Dyson v HMRC [2015] UKFTT 131 (19 March 2015), the FTT struck out an appeal on behalf of a partnership by a partner who was not the representative partner.

Mr Dyson and Mr Walker had formed a partnership, of which Mr Walker was the representative partner. Penalties were issued against the partnership  for late filing; and Mr Dyson sought to appeal against these. The issue was whether Mr Dyson had a right of appeal, given that he was not the representative partner.

The FTT noted that the TMA 1970 does not define ‘representative partner’ but that, in practice, a partnership is required to register with HMRC using form SA400, which asks the partnership to identify the representative partner. The FTT observed that, although HMRC can levy late filing penalties on all ‘relevant’ partners, under TMA 1970 Sch 55 para 25(4), only the representative partner or his successor has a right of appeal. This means that an appeal by the representative member would encompass the penalties charged on both partners.

The FTT also referred to an interim report by the Office of Tax Simplification, published in January 2014, which highlighted the potential for ‘significant unfairness’ in those provisions. A partner who is not the representative partner, but who believes that he has a reasonable excuse, cannot appeal.

Finally, the FTT pointed to the European Convention on Human Rights art 6, which entitles anyone faced with a criminal charge to a ‘fair and public hearing’, it being accepted that tax penalties are ‘criminal’ for these purposes. The FTT added that under the Human Rights Act 1998 s 3, UK legislation must be ‘read and given effect in a way which is compatible with the Convention rights’. It was, however, not possible to read Sch 55, para 25(4) in a way that made it compatible with ECHR.

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Why it matters: Clearly, the appellant’s right under ECHR had been breached, yet the FTT was unable to enforce those rights and the appeal was struck out. It therefore seems that, in cases of absolute conflict between the ECHR and domestic legislation, domestic legislation will prevail.

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