TC09540 - [2025] UKFTT 00600 (TC)

It is not disputed that the due dates for filing an ATED return, the dates on which the returns were actually filed by the Company and the days by which the returns were late, are as set out in the table at paragraph 34, above. It is also not disputed that the Company was issued with penalties issued under schedule 55 to the Finance Act 2009 on the dates and in the amounts set out in the table at paragraph 35, above.

Therefore, in the absence of a reasonable excuse or special circumstances, the Company is liable to these penalties which were correctly issued by HMRC.

However, as is apparent from its letters of 23 September 2024 (see paragraph 31, above) and 11 November 2024 (see paragraphs 33 and 34, above), the Company contends that it does have a reasonable excuse for its failure to file its ATED returns on time, in particular it asserts that:

In summary, therefore, accepting its assertions as proven, the Company contends that it was unaware of its obligation to file ATED returns and had not been notified of the requirement to do so by either HMRC or its accountants. It also questions the amount of the penalties especially as there was no tax due on the ATED returns.

First, with regard to the amount of penalties, these are set by statute (ie s 106 and schedule 55 to the Finance Act 2009) and apply even if no tax is due. It is clear from HOK the Tribunal does not have the jurisdiction to set aside or discharge such statutory penalties even if it considers them to be unfair. As the Upper Tribunal said in HOK at [56]:

“… It is impossible to read the legislation in a way which extends its [ie the Tribunal’s] jurisdiction to include—whatever one chooses to call it—a power to override a statute or supervise HMRC’s conduct.”

As reliance on a third party is specifically precluded from being a reasonable excuse by paragraph 23(2)(b), I am unable to find the Company’s reliance on its accountants to advise it of the requirement to file ATED returns amounts to a reasonable excuse.

Even if that were not the case, I find myself in the same position as the Tribunal in Hughes Property Partners Limited v HMRC [2023] UKFTT 352 (TC). This was a case, like the present, which was concerned with penalties for the late filing of ATED returns which the appellant contended arose due to its agents lack of knowledge of ATED. At [25] of its decision the Tribunal referred to the decision of the Upper Tribunal in HMRC v Katib [2019] UKUT 189 (TCC), noting:

“… the Upper Tribunal found that reliance on an accountant who fails the taxpayer cannot assist where a statutory time limit is missed. At paragraph 58 the Upper Tribunal stated unequivocally that:-

‘It cannot be the case that a greater degree of adviser incompetence improves one’s chances of an appeal, either by enabling the client to distance himself from the activity or otherwise.’

The Upper Tribunal went on to find at paragraph 59 that:-

‘… We do not consider that, given the particular importance of respecting statutory time limits, Mr Katib’s complaints against Mr Bridger or his own lack of experience in tax matters are sufficient to displace the general rule that Mr Katib should bear the consequences of Mr Bridger’s failings and, if he wishes, pursue a claim in damages against him or Sovereign Associates for any loss he suffers as a result…’.

26.

Whilst we certainly accept that at all times both the appellant and the appellant’s agent have acted in good faith, nevertheless the reasons advanced for the late filing do not amount to a reasonable excuse. HMRC’s website provides clear and extensive information as to when and how an ATED  return must be filed.”

Given the “clear and extensive” information on HMRC’s website, the fact that the Company was not notified by HMRC, which has no obligation to do so, of the requirement to file ATED returns cannot amount to a reasonable excuse either.

Also, because of that clear and extensive information, I consider that the requirement to file ATED returns on time falls within the first category identified by Simon Brown J in Neal, a primary obligation of which it cannot be objectively reasonable for the Company to have been ignorant. The Company’s appeal cannot therefore succeed on the basis of its lack of knowledge that it was required to have filed ATED returns.

Although the Company contends that because of the value of its interest in the Property ATED returns were not required and that, as such, it should not be liable to the penalties (see paragraph 4, above) it has not provided any valuation evidence in support. In the absence of such evidence I am not able to accept what is in effect no more an assertion by the Company as to the value of the Property and that it was not required to submit ATED returns.

In its correspondence with the Tribunal following the Tribunal’s letter of 28 April 2025 (see above) the Company has asked whether it could provide additional documents subsequent to the decision. I am afraid the answer is no. Although this matter has been determined on the papers the position is identical to it being determined after a hearing.

As the Supreme Court observed in AIC Limited v Federal Airports Authority of Nigeria [2022] 1 WLR 3223 at [29]:

“... the higher courts have in a number of respects laid down important and binding principles regarding what justice requires in the context of litigation which are relevant to the application of the overriding objective in the CPR, and one of these is that there should be finality in litigation. This is a general principle with various aspects, including the rule in Henderson v Henderson (1843) 3 Hare 100 by which a party is precluded “from raising in subsequent proceedings matters which were not, but could and should have been raised in earlier ones" (see Virgin Atlantic Airways Ltd v Zodiac Seats UK Ltd (formerly Contour Aerospace Ltd) [2014] AC 160 para 17). This rule “is firmly underwritten by and inherent in the overriding objective [in the CPR]" (Sainsbury's Supermarkets, para 239). As Sir Thomas Bingham explained in Barrow v Bankside Members Agency Ltd [1996] 1 WLR 257, 260 in a passage quoted in Sainsbury's Supermarkets, para 239:

'The rule in Henderson v Henderson ... requires the parties, when a matter becomes the subject of litigation between them in a court of competent jurisdiction, to bring their whole case before the court so that all aspects of it may be finally decided ... once and for all. In the absence of special circumstances, the parties cannot return to the court to advance arguments, claims or defences which they could have put forward for decision on the first occasion but failed to raise.'" 

Lewison LJ made the same point in his oft-quoted remark in FAGE UK Ltd v Chobani UK Ltd [2104] EWCA Civ 5 at [114] when he said:

“The trial is not a dress rehearsal. It is the first and last night of the show."

Finally, having carefully considered the circumstances of the case I am unable to find anything “special” for it to be right to reduce the penalty especially as it is clear from Edwards that the fact that no tax is due cannot amount to special circumstances to be taken into account when considering a reduction in the penalty.

Therefore, for the reasons above, the Company’s appeal is dismissed and penalties, in the amounts stated in paragraph 30 above, confirmed.

This document contains full findings of fact and reasons for the decision. Any party dissatisfied with this decision has a right to apply for permission to appeal against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009. The application must be received by this Tribunal not later than 56 days after this decision is sent to that party. The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice.