TC09679 - [2025] UKFTT 01331 (TC)

We were provided with two bundles of documents. The first, the main hearing bundle, comprised some 276 pages including authorities. The second, a supplementary bundle which ran to 19 pages, contained documents sent by HMRC to the appellant’s agent on 11 June 2025. The appellant gave oral evidence. We find his evidence to be entirely credible and reliable. From the relevant documentary and oral evidence, we find as follows:

When the appellant came to the UK from Holland some years ago, he was advised that he should retain the services of a chartered accountant to assist with his accounts and tax affairs. He did this, and for the years in question, instructed Mr Smith, a chartered accountant, to undertake these tasks.

The appellant was conscious of his obligations towards the UK tax system and HMRC and wanted to ensure that he had no problems with them.

Both the appellant and Mr Smith were fully aware of the deadlines within which a self-assessment tax return should be submitted to HMRC. Accordingly, the appellant would submit the relevant information to Mr Smith in good time, and this would be followed up by a face-to-face meeting with Mr Smith at which that information was discussed and clarification (if needed) sought regarding expenses and other matters.

Mr Smith would prepare the appellant’s self-assessment tax return which the appellant would sign. It was Mr Smith’s responsibility to submit that return to HMRC.

It was the appellant’s evidence that once he had signed the return, he assumed that Mr Smith would submit the return on a timely basis.

On no occasion did Mr Smith mention to the appellant that he was having any difficulties with HMRC.

It was the appellant’s evidence that there was nothing which put him on notice that Mr Smith was not doing what he had been instructed to do, namely to file the relevant tax returns on a timely basis.

If the appellant received correspondence from HMRC during the course of the year, he read it and passed it on to Mr Smith for Mr Smith to deal with. Although he could not remember doing this, he thinks it is more than likely that this was what he did when he received the late filing penalty notices from HMRC.

Mr Smith suffered from poor health and passed away some years ago and the appellant now instructs Mr Ross, also a chartered accountant. Since instructing Mr Ross, there have been no issues with HMRC.

The appellant is paying approximately £40 a month to HMRC on a voluntary basis having been advised to do so in respect of the outstanding penalties.

Having heard nothing from HMRC regarding the penalties after 2016, he assumed that they had been waived or rescinded. It came as some shock to him when debt collectors started chasing him for the money.

The due date for filing the relevant tax returns and the dates on which they were actually filed are set out in the appendix.

HMRC’s electronic records show that the late filing penalty of £100 for 2010/2011 was issued on 14 February 2012.

Those records also show that for 2011/2012 the late filing penalty of £100 was issued on 12 February 2013, the daily penalty of £900 was issued on 14 August 2013 as, too, was the six-month late filing penalty of £300. The 12 month late filing penalty of £300 was issued on 25 February 2014.

For the tax year 2012/2013, the late filing penalty of £100 was issued on 18 February 2014, the daily penalty of £900 was issued on 18 August 2014, and the six-month late filing penalty of £300 was issued on the same date.

For 2014/2015, the late filing penalty of £100 was issued on 17 February 2016, the daily penalty of £900 was issued on 12 August 2016, as was the £300 six-month late filing penalty.

HMRC’s self-assessment notes for the appellant which record contacts between HMRC, the appellant and/or the appellant’s agent record that on 20 May 2013 (in relation to a daily penalty for 2011/2012) the appellant was told that his tax return for that year had still not been received and he was incurring £10 per day of daily penalties. The note records that the taxpayer would contact the agent as soon as possible.

Those notes further record that on 5 June 2013, there was a further telephone conversation between the appellant and HMRC who had a query about “his” time to pay agreement. It also records that daily penalties were discussed and that the appellant would speak to his agent.

The notes further record that on 23 August 2013 there was a further conversation between HMRC and the appellant regarding late filing penalties. He was advised that the tax return for 2011/2012 was still outstanding and so penalties were due and payable. The appellant told HMRC that Mr Smith was responsible for filing his returns. HMRC advised the appellant to contact his accountant as soon as possible regarding the penalties and interest.

The notes further record that on 1 August 2014 there was a telephone conversation between HMRC and the appellant’s agent who said that he would file the 2011/2012 and 2012/2013 returns as soon as possible and was having online difficulties.

In a letter dated 10 March 2022, HMRC notified the appellant of the penalties and the fact that he was accruing interest as a result of late payments. A late appeal was made against those penalties by Mr Ross. HMRC did not accept the late appeal, but permission to bring the late appeal was given by Judge Rankin in his decision issued on 1 August 2024 (“Judge Rankin’s decision”).

In his notice of appeal, the appellant asserted that: the charges seem to relate to years where no tax liability arose and thus no tax was lost to HMRC; Mr Smith had been ill for several years and had passed away; Mr Smith would have appealed against any penalties on a timely basis; the first time the appellant received any indication of the outstanding liabilities was on 10 March 2022.