Invalid penalties again

David Whiscombe commends attention to detail.

When a Tribunal finds in favour of a taxpayer because of a basic procedural failing on the part of HMRC, it is both refreshing and depressing.  Refreshing because it is in the best traditions of justice that an appeal body will not take it for granted that the procedures of a department of state comply with the law, but will on its own initiative consider points that may not have been put forward or even recognised by an unrepresented taxpayer.  Depressing because a department of state really ought to be capable of ensuring that its procedures comply with the law.

Mrs Haigh had failed to file a tax return when asked to do so by HMRC.  Actually, the facts are not quite that simple.  HMRC had on 6 April 2016 issued a notice requiring Mrs Haigh to file a tax return.  One was filed in October 2016 but – whether by oversight, chauvinism or undocumented grant of authority – it had been signed not by Mrs Haigh but by her husband.  HMRC wrote to Mrs Haigh in December 2016, rejecting the return but saying (concessionally) that no penalties would be charged if it were to be refiled with the right signature within 21 days of the rejection.  In the event it was refiled in March 2017.

HMRC therefore sought an initial penalty of £100 (because the return was filed after the statutory filing date of 31 October 2016) and daily penalties of £430 (because the return was more than three months late).

The Tribunal found that there was no “reasonable excuse” for the delay.  Nor were there any “special circumstances”.  And it was outwith the Tribunal’s authority to consider whether the penalties were inappropriate, unfair or disproportionate.  So why did HMRC not win – or at least not fully win?

The answer lies in the statutory requirements regarding a notice to file a tax return.  Such notice is required to be given not “by HMRC” but “by an officer of the Board”.  The Tribunal interpreted this – correctly, we think – as a requirement that the notice should be given by a particular named individual.  Because HMRC had presented no evidence that this was the case (they presented only extracts from their computer records purporting to indicate that a notice to file was issued to Mrs Haigh at a particular address, together with a pro forma copy of the front page of a tax return) the Tribunal held that what HMRC had sent Mrs Haigh on 6 April was not a valid “notice to file”, so there could be no penalties for failing to comply with it.

However, Mrs Haigh did not escape penalties altogether.  The letter of December 2016 rejecting her tax return and asking her to refile a properly signed version was sent by an identifiable named officer and did meet the requirements to be a “notice to file”.  Mrs Haigh was therefore liable to a penalty for failing to comply with that notice within the three-month period allowed to do so: as a result, the initial penalty of £100 was valid, albeit for reasons quite different from those put forward by HMRC.

Moral: for taxpayers, when confronted by a penalty, check that every procedural requirement has been fulfilled.  For HMRC, read the legislation.

For more information, please get in touch with your usual BKL contact or use our enquiry form.

Hear more from David Whiscombe at our capital gains tax webinar on 13 September.



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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