Matthew Atkin v The Commissioners for HMRC
[2024] UKFTT 786 (TC)
Thomas Cruise v The Commissioners for HMRC
14 November 2022
[2023] UKFTT 41 (TC)
First-tier Tribunal
Mr. Cruise was fined for filing his taxes late. He said he didn't know because he thought his business email (used for tax communication) was closed, and he had an accountant. The judge said that wasn't a good enough excuse because he should have checked his emails and made sure his taxes were filed correctly. The judge kept the fines.
Key Facts
- •Thomas Cruise appealed penalties for late filing of his 2019/2020 self-assessment tax return.
- •Penalties included an initial £100 penalty, £900 in daily penalties, and a £300 penalty for being more than six months late.
- •Mr. Cruise used HMRC's online services and received notices electronically.
- •HMRC's digital records showed that notices were sent and read by Mr. Cruise.
- •Mr. Cruise claimed he didn't receive the notices because he believed his company's email address, used for online services, was closed.
- •Mr. Cruise argued he relied on an accountant and was confused about personal vs. company tax returns.
Legal Principles
Penalties for late filing of self-assessment tax returns are governed by Schedule 55, Finance Act 2009.
Schedule 55, Finance Act 2009
A taxpayer is not liable for penalties if they have a "reasonable excuse" for the late filing. Reliance on another person is not a reasonable excuse unless reasonable care was taken to avoid the failure.
Schedule 55, Finance Act 2009, Paragraph 23
HMRC has discretion to reduce penalties due to "special circumstances." This decision can only be challenged if flawed under judicial review principles.
Schedule 55, Finance Act 2009, Paragraph 16
The test for a "reasonable excuse" is objective; would a responsible person in the taxpayer's situation have acted the same way?
The Clean Car Company Ltd v The Commissioners of Customs & Excise [1991] VATTR 234
Electronic communication of tax notices is valid under the Electronic Communications Regulations 2003.
Electronic Communications Regulations 2003
Outcomes
The appeal was dismissed.
Mr. Cruise's arguments did not constitute a "reasonable excuse" for the late filing. His failure to check his online account and email alerts, confusion with company tax returns, and reliance on an accountant without sufficient evidence of reasonable care were not considered valid excuses.
HMRC's decision not to reduce the penalties due to "special circumstances" was upheld.
The Tribunal found HMRC's decision was not unreasonable.