Classic error: penalty procedure

Classic Land and Property Ltd [2016] TTFT2 was on the face of it an open-and-shut case.  The company had bought some land in Scotland and had failed to file the necessary Land and Buildings Transaction Tax return on time (LBTT being what applies in Scotland in place of SDLT: for all purposes relevant to this case the legislation is substantially identical).  The appeal on the grounds that a penalty of £1,000 for failing to file a nil return for a purchase costing £41,000 is a bit over the top (though phrased more elegantly than that) inevitably failed to find favour with the Tribunal.

However, the point of interest in the case is that the appeal nonetheless succeeded.

The company had (through its solicitors) exercised its right to have its appeal against the penalty “reviewed” by Revenue Scotland (the body with deals with LBTT).  The legislation required Revenue Scotland to “notify the appellant” of the conclusions of the review. Revenue Scotland had notified the solicitors but had not notified the company itself.  RS argued that telling the solicitors, as appointed agent and the people who had actually sought the review, was good enough.  The Tribunal disagreed: “notify the appellant” means “notify the appellant”.

The legislation does not specify the consequences of a failure on the part of RS to notify the appellant of the conclusion of its review of an appeal.  Indeed, it recognises the possibility that this might happen by expressly providing that if no conclusion is notified, the appeal can be referred to the Tribunal in the same way as if RS notify their conclusion that their decision is to be upheld.  Nonetheless the Tribunal in the Classic case decided that “the failure to follow statutory provision vitiates all subsequent procedure…Classic should have met its statutory obligations by filing its tax return on time but RS has not followed its statutory obligations either and so the penalty cannot be enforced.”

Care should be taken in applying the decision.  The point seems to have been one raised by the Tribunal of its own volition.  We think there is considerable doubt as to whether the Tribunal decision was correct and even if it is, it is not binding on other First-tier Tribunals.  The interest in the case is that, especially in hard cases, a sympathetic Tribunal may be willing to find procedural ways to arrive at the “right” answer and it is always worth checking out the procedural niceties.



Sam Inkersole

In 2022, Sam won the Taxation’s Rising Star award at the Taxation Awards in and was named in the Accountancy Age 35 Under 35.

Jon Wedge

While Jon’s client work focuses on the financial services sector, he also oversees the firm’s assurance service, as well as supporting the trainees following in his footsteps.


Elana joined us in 2017 as an ACA trainee, after graduating from Durham University where she had studied languages. She is now a manager in our assurance team.


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