Online accounts: how going paperless with HMRC can be perilous

David Whiscombe counsels caution in going paperless with HMRC.

Pretty much every organisation nowadays encourages you to deal with it electronically rather than on paper.  And like many a late convert to a cause, HMRC are now positively evangelistic in their devotion to online working.

When a taxpayer yields to HMRC’s imprecation to “go paperless”, HMRC stop communicating (at least as regards routine compliance matters) via the postal system.  Instead, they post relevant messages and notifications in the taxpayer’s online account, and at the same time send an email to the taxpayer’s last known email address simply advising that “You’ve got a new message from HMRC: to view it, sign into your HMRC online account”.  It then becomes the taxpayer’s responsibility to log into the secure account and to pick up the message or notification.  What could possibly go wrong?

Quite a lot, as the recent First-tier Tribunal case of Armstrong [2018] FTT 0404 (TC) shows.

Ms Armstrong had elected for “paperless contact” with HMRC.

HMRC posted on 6 April 2016 a notice requiring her to file a tax return.  When she failed to do so by the due date of 31 January 2017, HMRC posted (on 7 February 2017) a penalty notice charging an initial penalty of £100.  The return was eventually filed on 13 December 2017, but meanwhile HMRC had assessed further penalties of £1,200.  Ms Armstrong appealed against the penalties, on various grounds including that she had been unaware of the electronic messages in her mailbox.

The Tribunal examined the precise wording of the regulations and decisions governing “paperless contact”.  The crucial point revolved around the question of whether, in signing up, Ms Armstrong had given her informed consent to receive notifications through the secure online account.  In other words, had she appreciated what she was signing up to?

The Tribunal concluded that people in Ms Armstrong’s position “would realise that they would get a notice to file a return sent to their secure mailbox, replacing the paper notices to file, that they would get reminders that returns and payments of tax are becoming due and that they would get statements of their tax position from time to time… What they would not necessarily realise is that if they came to be in the small minority of late filers, that not only would HMRC send any penalty notices to the secure inbox, but also that any email they sent to alert a person to that notice of penalty would be as bland and uninformative as the emails that [HMRC] has put in evidence.”

Thus, Ms Armstrong had not, in the Tribunal’s view, given informed consent to receive penalty notices online: the notices had not therefore been validly issued and the penalties were not collectable.

For good measure the Tribunal also tested whether, even if Ms Armstrong had consented, HMRC’s evidence adequately proved that the notices had been issued in accordance with the regulations and found that they had not.  Tribunals are increasingly willing to hold HMRC accountable for precise compliance with every jot and tittle of the law; and often finding that HMRC fall short – for another recent example, see our piece on Invalid penalties.

Ms Armstrong might consider herself lucky: another Tribunal might have reached a different decision on both counts.  Indeed, in the later case of Pearce [2018] FTT 466 (TC) another Tribunal did just that, on broadly similar facts.  But the key point to take away from the case is this: if you sign up for “paperless contact” with HMRC (or, we venture to suggest, any other organisation, though that’s above our pay grade) do not “click and forget”: you need to make sure that you are aware of all the implications and of the desirability of checking in from time to time.

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



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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