A taxpayer’s appeal against several late filing penalties from HMRC has been partly allowed, with the First Tier Tribunal cancelling a 12-month penalty due to special circumstances but ruled that there was no reasonable excuse for fling the tax return late
Yvonne Marshall submitted an unsigned 2010-11 tax return just under 12 months late, which HMRC would not accept, so she subsequently filed her signed paper tax return 12 months late.
Due to this she incurred a £100 initial late filing penalty, daily penalties amounting to £900 (£10 a day for 90 days), a six-month late filing penalty of £300 and a £300 12-month late filing penalty.
She appealed against all the penalties, claiming that the partnership she was included in has ended during 2010-11 and the income from the final trading period had been included in the 2009-10 tax return so a return should not have been issued.
She also claimed that the partner responsible for the administration and accounts had personal circumstances which led to a delay in completing the final accounts. Among other reasons she stated that she was unaware the return had been issues or that she had to complete a personal tax return and that she had to deal with stress due to the penalties imposed on her.
The FTT found that, without taking into account special circumstances or reasonable excuse, HMRC has calculated the penalties correctly.
It ruled that reasonable excuse could not be applied in the case because the return was issued to her home address, she has been in the self-assessment regime for 10 years so should know that she would have to submit a return and HMRC made it clear what they expected while also warning her about the penalties.
It made no difference that another partner was responsible for the delay in completing the partnership return as she could have used provisional figures in her return.
The FTT also said that there was no medical evidence submitted of the stress she had suffered and it was said to have arisen as a result of the penalties, therefore it could not be used as a reasonable excuse for not filing the tax return.
However, the FTT found that HMRC’s decision to hand Marshall a 12-month penalty did not consider all material features when they assed whether there were any special circumstances. Therefor her appeal was allowed against the 12 month late submission penalty but dismissed all other aspects of the appeal.
Marshall [2017] TC 05916 is available here.
