A taxpayer who had completed her tax return but had not taken the final step of submitting it has successfully appealed against late filing penalties totalling £1,600 after the First-tier Tribunal (FTT) ruled that she had a reasonable excuse for failing to submit the return on time.
When completing her return for the 2019/20 tax year, she had opted in to receive communications from HM Revenue and Customs (HMRC) electronically. The following year, she completed and saved her 2020/21 return but did not submit it. As a result, HMRC issued a series of late filing penalties, notifications of which were sent to her Personal Tax Account (PTA). On each occasion, she received an email informing her that there was a message on her PTA.
However, she claimed that she had been unaware that she had opted in to receive electronic communications. Believing that she had submitted her 2020/21 return, she was not expecting to be contacted by HMRC and therefore deleted the emails, believing them to be spam. She only became aware that anything was wrong after receiving a debt management letter by post in March 2023. She submitted the return shortly afterwards.
Ruling on her appeals against the penalties, the FTT first had to decide whether to allow her to appeal late. The delays were undoubtedly serious in nature, the appeals being between 176 and 519 days late. However, the FTT found that she had signed up for electronic communications unintentionally and therefore had good reason to believe that the emails she had received were spam and/or phishing exercises. The penalties were significant given her income levels, and refusing to admit the appeals would therefore cause her particular prejudice. The FTT concluded that it was appropriate to admit the appeals.
Allowing the appeals, the FTT noted that her tax affairs were relatively simple. She had routinely filed her tax return on time in previous years. Her computation for the 2020/21 tax year had shown that she had no tax to pay, and it was not unreasonable of her to conclude that, when the screen suggested that there were no further steps to take, she had in fact completed the process. She had taken a screenshot as evidence that she had done so, demonstrating that she took a non-cavalier approach to her tax obligations. In the circumstances, it was reasonable for her not to have checked her PTA. She therefore had a reasonable excuse for failing to submit the return until she became aware of the problem in March 2023, after which she had remedied the failure extremely quickly.