Key Facts
- •Hayley Farmer (Appellant) appealed penalties under Schedule 55 of the Finance Act 2009 for late filing of a self-assessment tax return.
- •Penalties included a £100 late filing penalty, £900 daily penalty, and £300 6-month penalty, totaling £1300.
- •The tax return was sent to an incorrect HMRC address (L75 1ZY) on April 27, 2022, and received at the correct address on September 14, 2023 (318 days late).
- •The Appellant argued reasonable excuse due to the incorrect address.
- •HMRC argued the Appellant should have acted after receiving the initial penalty.
Legal Principles
Initial burden of proof lies on HMRC to show penalties are due; then, the burden shifts to the Appellant to show reasonable excuse.
Perrin v R & C Comrs [2018] BTC 513
Reasonable excuse is an objective test, considering all circumstances and the taxpayer's attributes.
Rowland v R & C Comrs (2006) Sp C 548; The Clean Car Co Ltd v C&E Comrs [1991] VATTR 234
Four-step process for determining reasonable excuse (establishing facts, proving facts, deciding if facts constitute a reasonable excuse, deciding if failure was remedied without unreasonable delay).
Perrin v R & C Comrs [2018] BTC 513
Mere mistake does not constitute a reasonable excuse.
Garnmoss Ltd. T/A Parham Builders v HMRC [2012] UKFTT 315 (TC)
HMRC can reduce penalties if special circumstances warrant, but this requires a high threshold; the mere fact of no tax liability doesn't qualify.
Schedule 55, para. 16; Edwards v R &C Comrs [2019] BTC 516
Service by post is deemed effected upon properly addressing, pre-paying, and posting; unless the contrary is proven.
Interpretation Act 1978, s 7
Outcomes
Appeal allowed in part.
The Appellant had a reasonable excuse for the initial late filing penalty due to sending the return to an incorrect, albeit HMRC-associated, address. However, the failure to remedy the situation promptly after receiving the initial penalty notice negated the reasonable excuse for the subsequent penalties.