Judgment summary
This appeal concerned late filing penalties imposed by HMRC on Daniel Monaghan in respect of his 2019/2020 self-assessment tax return (1). The matter was determined on the papers under rule 29(1) of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 (2).
HMRC contended that the appeal to the Tribunal was late and objected to it proceeding (1). The Tribunal found that the appeal was indeed lengthy, over three years late in respect of most of the penalties (30), but exercised its discretion under s.49(2)(b) TMA 1970 to allow the late appeal (37).
Having allowed the late appeal, the Tribunal went on to determine the substantive appeal. It found that HMRC had failed to provide any evidence that a notice under section 8 TMA 1970 had been served on the Appellant requiring him to submit a return, which is a precondition for liability to a late filing penalty (39, 41). As a result, the statutory basis for the penalties had not been established, and the appeal was allowed on that ground alone (41-42).
Background
The Appellant, based in France, completed the SA100 Tax Return 2020 paper form by hand around 20 October 2020, including UK Property pages and Residence pages, claiming £16,700 as Double Taxation Agreement income relief at box 20 (6).
On 27 January 2021, HMRC returned the return as unsatisfactory, requesting further information including an HS304 form and Certificate of residence from France (7). The Appellant made further submissions of the return on 1 March 2021, around 20 September 2021, and again on 15 January 2025 (9, 10, 18).
The Appellant engaged in extensive correspondence and telephone contact with HMRC between 2021 and 2025, including letters dated 26 April 2022 and around November 2024, and a complaint dated 20 January 2025 (13, 15, 19). He asserted that he had been told by HMRC staff that penalties would be cancelled (23, 31(2)).
On 13 December 2024, HMRC wrote stating that the deadline for appealing the penalties had passed and that they did not accept there was a reasonable excuse (17). On 12 March 2025, HMRC issued a tax assessment of £331.40 for the year (20). On 20 March 2025, HMRC confirmed it could not accept the appeal against the penalties as being out of time (21). The Appellant appealed to the Tribunal on 10 April 2025 (22).
HMRC's Statement of Reasons asserted total late filing penalties of £1,300, comprising a £100 initial penalty (15 April 2021), a £900 daily penalty and a £300 six-month penalty (both 23 September 2021) (4). However, other documents referred to a fourth, 12-month late filing penalty and a total of £1,600, and the Tribunal found that four penalties were in fact at issue (the Penalties) (4).
Core dispute
The dispute concerned two issues: first, whether the Appellant should be given permission to bring a late appeal against the Penalties, given that the appeal to HMRC was made well outside the 30-day statutory time limit (28-30); and second, if the late appeal were allowed, whether the Penalties themselves were validly imposed, in particular whether HMRC had established that a notice under section 8 TMA 1970 requiring the Appellant to file a return had in fact been served (35-36).
Court findings
Applying the three-stage test from Martland v HMRC [2018] UKUT 178 (TCC), the Tribunal found the delay to be serious and significant, being over three years for most of the Penalties (30). However, it found that the Appellant had at all times striven to comply with his tax obligations, submitting the return four times and understanding from telephone calls that the penalties would be cancelled (31). HMRC's submission that there was no reason for the delay, based on a letter dated 17 November 2022 that did not appear in the bundle, was rejected as unhelpful (32).
Weighing all the circumstances, including the obvious strength of the substantive appeal, the Tribunal found the overall balance favoured allowing the late appeal (33-37).
On the substantive appeal, the Tribunal applied the principle from Rogers v HMRC [2019] UKUT 406 (TCC) and Marano v HMRC [2024] EWCA Civ 876, that HMRC must prove a section 8 TMA 1970 notice was served before a late filing penalty can arise. The Tribunal found no notice in the hearing bundle, no witness statement addressing service of a notice, and no assertion in HMRC's Statement of Reasons that a notice was given or when (36, 39). The Tribunal held that the wording on the SA100 form itself did not satisfy the requirement for a notice under s.8(1) TMA 1970, following Wood v HMRC [2018] UKFTT 0074 (TC) (40).
The Tribunal concluded that HMRC had not discharged the burden of proving that a section 8 notice was served, so the statutory basis for the Penalties had not been established (41).
Outcome
The Tribunal allowed the late appeal to proceed and allowed the substantive appeal against the Penalties, on the basis that HMRC had failed to prove that a notice under section 8 TMA 1970 had been served on the Appellant (41-42). It was therefore unnecessary to consider the validity of the penalty notices under paragraph 18 of Schedule 55, or any issue of reasonable excuse under paragraph 23 of Schedule 55 (41).
Major issues / areas of contention
- Whether the Appellant should be granted permission to bring a late appeal against the late filing penalties, given a delay of over three years for most of the penalties (30, 37).
- Whether HMRC had proved that a notice under section 8 TMA 1970 was served on the Appellant, a precondition for liability to late filing penalties under Schedule 55 Finance Act 2009 (35-36, 41).
- Whether the wording on the SA100 2020 Tax Return form itself could satisfy the requirement for a section 8(1) notice (40).
- Uncertainty over the exact number and amounts of the penalties at issue, given inconsistencies between HMRC's Statement of Reasons and other documents in the bundle (4).