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Wayne Pendle v HMRC

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In Wayne Pendle v HMRC [2015] UKFTT 0027 (20 January 2015), the FTT found that the taxpayer could not rely on the Bill of Rights to refuse to sign his tax return.

Mr Pendle appealed against a penalty for late filing. Although he had sent his return on time, he had not signed the declaration in Box 22.

When HMRC had sent the return back to him, Mr Pendle had cited the Bill of Rights and explained that signing the declaration would be ‘signing away his constitutional rights’. He had eventually signed the return ‘wholly under duress and under the threat of extra fines’.

The FTT noted that TMA 1970 s 8 prescribes the contents of a return, namely the information reasonably required to establish a person’s taxable income and capital gains. There is therefore no statutory obligation for the taxpayer to sign a declaration that he understands that ‘he may have to pay financial penalties and face prosecution if he gives false information’. However, the declaration that the information contained in the return is correct and complete is required by s 8 and Mr Pendle had not signed that declaration by the due date. The return he had filed by the due date was therefore incomplete.

Relying on the Bill of Rights, Mr Pendle also argued that penalties could not be issued without a conviction.  Applying Jussila v Finland ([2009] STC 29), the FTT confirmed that the penalty could be criminal in nature. However, referring to R (oao McCann) v Kensington & Chelsea [2002] UKHL 39, the FTT found that, as the penalties do not ‘culminate in the conviction and condemnation’ of the taxpayer and simply require the payment of a fine, they were not criminal under UK law.

In any event, the FTT noted that the application of the Bill of Rights was not limited to criminal penalties, as ‘civil penalties did not exist in 1689’. The Bill of Rights could therefore have applied, were it not for the fact that it only banned the imposition of fines without appeal. The FTT added that, in any event, the conclusion that the Bill of Rights had been amended by subsequent legislation was ‘irresistible’.

The FTT concluded that although Mr Pendle’s belief that he could rely on the Bill of Rights had been genuine, it had not been reasonable and so he had not had a reasonable excuse for not signing the declaration.

Read the decision

Why it matters: Many taxpayers have attempted to rely on ECHR, but this challenge based on the Bill of Rights was rather unique. The key finding of the FTT is that the Bill of Rights, whether or not relevant, has been amended by subsequent legislation and, in particular, tax legislation.