An appeal against an inaccuracy penalty inflicted on a professional footballer, due to his accountant making an error on his tax return, has been dismissed on the grounds that the taxpayer should have spotted the mistake
In Blackman [2016] TC 05218, the First Tier Tribunal (FTT) considered whether Nick Blackman, the professional footballer, had taken reasonable care to avoid the inaccuracy therefore should not be charged a penalty.
In 2012–13, Blackman was twice transferred between clubs (in August 2012 from Blackburn Rovers to Sheffield United and in January 2013 from Sheffield United to Reading) and therefore had three employments. His tax return made no mention of his first employment with Blackburn Rovers and accordingly he understated his income by approximately £45,000.
Blackman accepted that this was an inaccuracy, but appealed against a careless inaccuracy penalty of £1,142 charged by HMRC.
He claimed that he was not responsible for the inaccuracy as all his financial information was given to his accountants therefore it was them who missed the income from his tax return.
The footballer argued that because he was not a tax professional he should not be expected to understand a tax return and could therefore treat to return from his accountants as accurate, but HMRC said Blackman was responsible for checking his return.
Blackman’s defendants said: ‘Mr Blackman is a footballer nor a financial wizard. He rightly employed professional accountants to deal with his affairs in the same way that he wouldn't deal himself with any football injuries he might have but employ the use of physiotherapists, doctors, etc. He has every right to rely upon advice he is given by qualified professionals'
The FTT considered whether he had taken reasonable care to avoid the inaccuracy. They found the following factors relevant:
- When Blackman’s 2012–13 tax return was filed, he had been in continuous employment as a professional footballer for several years.
- Throughout Blackman’s employment, at any one time, he (even if out on loan) was an employee of a single club.
- In the ordinary course of things, Blackman would have been filing self-assessment returns for each of those years, in which his employment income was recorded.
- There had been at least one other tax year in which Blackman had been employed by more than one club in succession.
- There had been no admissible evidence that Blackman had not understood his tax return.
- Blackman collated financial information, with the help of his mother, and forwarded it to the accountants. The impression was that the role of the accountants was to complete the tax return fully and accurately, ie, to act in an administrative capacity.
- The task being performed and which went wrong was the completion of the employment parts of a self assessment return.
Taking these factors into account the FTT ruled that Blackman had failed to take reasonable care to avoid the inaccuracy and was therefore careless resulting in the appeal against the penalty being dismissed.
This was because it was reasonable to expect an individual to understand their employment history in a given tax year, he was expected to identify the error, the scenario was not complex, the FTT rejected the argument that the error arose from the inclusion on Blackman's P45 only of his income from Reading and Sheffield; and there was no evidence that his level of educational attainment or literacy meant that he was unable to read the tax return himself.
