Taxpayer Overturns £1,700 HMRC Penalty

Taxpayer Overturns £1,700 HMRC Penalty

Tribunal finds reasonable excuse for missed deadline when no tax owed

A recent First Tier Tribunal decision saw a taxpayer, Denise Howarth, overturn late filing penalties totalling £1,600 plus £170 interest after the court found that she had a valid reason for missing her self assessment submission deadline. In this case, Howarth owed no tax for the 2020-21 year, and failed to receive timely HMRC email notifications, which automatically ended up in her email junk folder.

Case Summary

Howarth, a self-assessment taxpayer since 2004, had consistently filed her returns on time—apart from a single previous incident where HMRC’s computer flagged a return as late. The Tribunal even decided in that instance that the return was submitted on time, contradicting HMRC computer records.

In 2020, Howarth was transitioned to digital alerts via the HMRC Personal Tax Account, notifying users of new actions or requirements. However, these alerts, lacking urgency indicators, ended up filtered from her main inbox. She had no memory of enrolling to receive only electronic updates and inadvertently missed reminders to file.

Key Points from the Tribunal’s Decision

• No tax was owed by the taxpayer for the period in question.
• Electronic notifications were not seen due to junk mail filtering.
• The Tribunal recognised the reasonable excuse provided by Howarth and overturned the penalties.

This decision highlights the importance of both proper taxpayer notification and accurate record-keeping by HMRC, especially as processes move to digital communications.

Quotes and Sources

The Tribunal observed: “It does not indicate the level of urgency. Howarth had no recollection of signing up for electronic alerts.”

The decision reinforces the need for HMRC to ensure clarity in communicating with taxpayers, as well as for taxpayers to monitor the delivery route of digital notifications.

• [HMRC hauls in record £409m in late payment interest](/hmrc-hauls-record-ps409m-late-payment-interest)
• [What is a reasonable excuse for HMRC?](/what-reasonable-excuse-hmrc)
• [1.1m taxpayers missed tax return deadline](/11m-taxpayers-missed-tax-return-deadline)

Practical Takeaway

Taxpayers should regularly check their junk and spam folders for important notifications from HMRC and consider adjusting their email settings. If you believe a late return penalty is unfair, collect evidence and consider appealing, especially when no tax is owed.

Take these steps:

1. Regularly monitor your personal tax account and email settings. 2. Retain accurate records of all correspondences with HMRC. 3. If penalised, check if you have a reasonable excuse as accepted by the Tribunal—including technical issues and honest errors.

For further guidance, consult an accounting adviser or visit HMRC's official self assessment help pages.