TC09540 - [2025] UKFTT 00600 (TC)

The Company, which at all material times had a single dwelling interest in a property in London (the “Property”), is a “chargeable person” for ATED purposes. It was therefore required to complete an ATED tax return for each period it held the single dwelling interest. These periods, the date by which the ATED was due, the date the return was actually filed and the number of days by which it was late are set out in the table below:

As the ATED returns for the period ending 31 March 2014 to 31 March 2024 (inclusive) were late, HMRC issued the penalties under schedule 55 to the Finance Act 2009 on the dates and in the amounts set out in the table below:

On 23 September 2024, the Company appealed to HMRC against the late filing penalties that had been issued by then. The letter referred to the fact that the Company had filed its self-assessment tax returns and paid its taxes on time. The letter also stated that the Company had filed its CT600 for 2021-22 and that HMRC “would have known from the filed accounts that the property was used solely on a commercial basis, clearly showing its Rental income which entitles it to the Rental Relief [from ATED under s 133 FA 2013].” The letter continued:

“During the eleven year period, there has never been any communication from the Inland Revenue about the late filing of the ATED Returns and that the Company would incur penalties. This would have alerted the Directors or the Accountants of the Company of the need to file its ATED Returns, which is the normal procedure with Companies House and the Inland Revenue regarding filing Self Assessments or the CT6000 Return.”

HMRC responded by letter of 15 October 2024 upholding the penalties. Enclosed with HMRC’s letter was a leaflet explaining that if the Company disagreed with HMRC’s decision it could, within 30 days, either request a review or appeal to the Tribunal.

Although the Company wrote to the Tribunal on 11 November 2024 and its letter has been treated as a Notice of Appeal, it would appear that the letter is actually a request to HMRC for a review. This is apparent from the first paragraph of the letter, which states:

“Following your letter dated 15 October 2024 we are writing to request a reconsideration of the decision to deny the penalty appeals for the above named company for the following years: 2013/14, 2014/15, 2015/16, 2016/17, 2017/18, 2018/19, 2019/20, 2020/21, 2021/22, 2022/23 and 2023/24 tax year.”

That letter explained that due to its complexity the “overseas entity”, the Company, was required to file self-assessment tax returns from 2013-14 to 2020-21. These were always filed and tax paid on time. From 2021-22 Companies House requested that it register as an overseas company and file CT600s. These were filed and paid on time in 2021-22 and 2022-23. It was, the letter explains, only when Companies House requested the entity be registered as a company that ATED was considered applicable. The letter continues:

“Furthermore, the directors of the above named company were not advised by the two previous accountants(one acting from 2013/14 to 20/21 and the other 2021/22 to 22/23), which both did not consider a return was due, due to the nature of the entity and the payment of taxes via income tax between 2013/14 to 2020/2021, the latter two years being via corporation tax. It wasn't until the company was a registered entity in the UK, that the ATED was considered, once it was understood the returns were required, all were filed promptly and without delay.

In addition, the penalties levied against the Company are very high especially considering there was no tax due on any of the ATED returns filed. It would be our request that a reduction in fines based on the fact the company has had no tax due on the ATED returns for any of the years mentioned and as stated, all previous SA700 & CT600 filings required were completed and paid within the deadlines.

We therefore request the above is considered in the reduction or removal of the penalties in question.”

On 9 December 2024, the Company sent the above letter to HMRC to confirm an appeal had been made to the Tribunal.

HMRC, however (and perhaps not surprisingly given its first paragraph) treated the Company’s letter as a request for a review. On 24 January 2025 HMRC issued a letter with its conclusion of the review which had been undertaken. This was to uphold the penalties.

Although the Tribunal listed a video hearing to determine the appeal the Company objected as it did not wish to incur the costs of being represented. On 25 March 2025, in response to Tribunal Directions, HMRC, which had provided its statement of reasons to the Tribunal and the Company on 19 February 2025, consented to the matter under appeal being decided on the papers. On 3 April 2025 the Company also confirmed that it consented to the appeal being determined on the papers without a hearing, adding that it had, “no further submissions to the Tribunal in this case”.