In Robert Morgan v HMRC and Keith Donaldson TC02720 two taxpayers had their daily £10 late filing penalties quashed by the First Tier Tribunal (FTT). HMRC went on to make a successful appeal to the Upper Tribunal and then the taxpayer lodged an appeal to the Court of Appeal.

Both cases were in relation to prolonged late filing of Self Assessment tax returns.

Late filing penalties were charged by HMRC under Schedule 55 FA 2009 these included daily penalties because the returns were outstanding for more than 3 months after the return filing deadline.

In Mr Morgan's case, the FTT found that HMRC have given the taxpayer "less than complete information" as to how the daily penalty regime operated. Had he known he was going to suffer daily penalties he would have filed his return sooner. This constituted special circumstances which allowed the tribunal to reduce his penalties to nil.

In any event, had his penalties not been reduced, both Mr Morgan and Mr Donaldson would have had their penalties quashed because the FTT decided that HMRC in automating its penalty issuing process had neglected to give a notice to taxpayer specifying the date from which the penalty was payable (as required by para 4(1)(c) Sch 55 FA 2009). 

HMRC has appealed this decision and it is listed for hearing with the Upper Tier Tribunal (UTT) and will be heard in July 2014.


This is a technical appeal based on:

  • the interpretation of the legislation in para 4(1)(c) which specifies that "HMRC give notice specifying the date from which the penalty is payable" and
  • what form that notice should take.

The FTT view is that parliament has given HMRC the power to backdate daily penalies and as such it intended that the taxpayer:

  1. should be given clear warning of the (in general) future imposition of a penalty charged each day he failed to file and
  2. clear notice of the date from which such daily penalties would run.

HMRC want the Tribunal to interpret this to mean they need only specify a date from which the penalty would be payable depending on the type of return ultimately filed.

HMRC uses general warning letters, but the question is whether a warning is a notice and can more than one letter consititute notice?


This decision has since been overturned by the Upper Tribunal and Court of Appeal who both found in favour of HMRC.

It is doubtful whether there will be any further appeal by the taxpayer.


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Robert Morgan v HMRC and Keith Donaldson [2013] TC02720