Sarah Godliman v The Commissioners for HMRC
[2024] UKFTT 81 (TC)
Hayley Farmer v The Commissioners for HMRC
2 September 2024
[2024] UKFTT 790 (TC)
First-tier Tribunal
Someone sent their tax return to the wrong HMRC address, resulting in penalties. The court said the first penalty was forgiven because of the address error, but they still had to pay the later penalties because they didn't fix the problem quickly enough after getting the first penalty notice. Just because they owed no tax didn't mean the other penalties were unfair.
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.