T09636 - [2025] UKFTT 01099 (TC)

As set out in further detail in the appendix, penalties are due where a taxpayer fails to submit a tax return by the specified deadlines as set out in Schedule 55. It was not disputed that:

If HMRC think it right because of special circumstances, they may reduce a penalty imposed under Schedule 55 (under para 16(1)). Special circumstances does not include ability to pay or the fact that a potential loss of revenue from one taxpayer is balanced by a potential over-payment by another (para 16(2)).

A taxpayer can appeal to the tribunal against a penalty or in respect of the amount of a penalty (and any such appeal is treated in the same way as an appeal against an assessment to tax). On an appeal against a penalty that is notified to the tribunal, the tribunal may affirm or cancel HMRC’s decision (under para 22(1)). On any appeal in respect of the amount of a penalty which is notified to the tribunal the tribunal may affirm HMRC’s decision or substitute for HMRC’s decision another decision that HMRC had power to make (under s 22(2) of Schedule 55). There are special rules about the application of para 16 of Schedule 55 if the tribunal substitutes its own decision.

There is no liability to a penalty under Schedule 55 in relation to a failure to make a return if the person satisfies HMRC or (on appeal) the tribunal that there is a reasonable excuse for the failure (under para 23(1)). For the purposes of this provision (a) an insufficiency of funds is not a reasonable excuse, unless attributable to events outside the person’s control, (b) where the person relies on another person to do anything, that is not a reasonable excuse unless he/she took reasonable care to avoid the failure, and (c) where the person had a reasonable excuse for the failure but the excuse has ceased, he/she is to be treated as having continued to have the excuse if the failure is remedied without unreasonable delay after the excuse ceased (under para 23(2)).

HMRC assert that they issued notices of penalty assessment to the same address as they had on file for the appellant at the relevant time. As regards each penalty (a) HMRC explained that penalty notices are issued directly to the taxpayer and copies of such are not held on the individual’s records for HMRC to access, (b) as evidence of the issue of the penalty notices, HMRC produced (i) a specimen notice of penalty assessment (SA326D), and (ii) an extract from HMRC’s computer records which describes the issue of the penalty in question.

HMRC assert that in addition to the late filing penalty notifications the appellant was sent “Self-Assessment Statements” on 08 March 2018, 13 September 2018, 7 March 2019, 18 April 2019, 12 September 2018, 12 March 2020, 31 December 2020 and 11 March 2021, a 30 day “daily penalty reminder” on 5 June 2018, a 60 day “daily penalty reminder” on 3 July 2018, a 30 day “daily penalty reminder” on 4 June 2019 and a 60 day “daily penalty reminder” on 2 July 2019. They produced a specimen copy of the 30 day and 60 day “daily penalty reminders”. Their records do not show any correspondence has been returned undelivered and the appellant did not dispute receipt of the notices to file or any of the late filing penalty notifications at any stage of the appeal process until the hearing (see below). In HMRC’s view appellant was correctly made aware of both the requirement to file tax returns for the 2016/17 and 2017/18 tax years and of the accruing penalties.

HMRC’s records show that the appellant registered for self-assessment on 24 June 2014 and has filed self-assessment tax returns previously. HMRC have no record of any correspondence having been received from the appellant or any agent during the period 11 September 2015 to 18 May 2021, the date on which the appellant submitted paper employment supplementary pages for the tax years 2016/17 and 2017/18. As set out below, the appellant was not informed by HMRC that these did not constitute full tax returns for those years until 2023.

At the hearing the appellant suggested that she may not have received some of the penalty notices as there had been difficulties sometimes with her receiving post at the relevant address HMRC state they were sent to. However, she was hesitant and not specific about the reason for the difficulties or which penalty notices she thought she may not have received, she had not raised this as an issue at any time prior to the hearing and, as set out below, the transcript of recorded calls which she had with HMRC record her as referring to receiving many penalty notices. On balance I consider it more likely than not that the appellant received all the penalty notices and other correspondence HMRC referred to.