In HMRC v Donaldson [2014] UKUT 0536 (TCC), the Upper Tax tribunal (UT) confirmed that HMRC had correctly imposed daily late filing penalties under para 4(1)(c) schedule 55 FA 2009. The case has been appealed by the taxpayer.

The decision concerns the meaning and construction of schedule 55 and whether HMRC's computer generated penalty notices did what the legislation required.

Prior to this ruling HMRC had allowed many appeals by taxpayers against daily late filing penalties on the basis that they were incorrectly imposed. This decision is important because there have been a lot cases put "on hold" awaiting its outcome.

When a taxpayer is late in filing a Self Assessment tax return HMRC imposes fixed penalties and if the default continues it may impose daily penalties, see Penalties: SA late filing.

Two taxpayers, Robert Morgan and Keith Donaldson made a successful appeal against daily £10 late filing penalties before the First Tier Tribunal (FTT) on the basis that HMRC failed to assess them correctly. 

HMRC appealed to the UT.

Para 4(1) says:
“Where P is liable for a penalty under any paragraph of this Schedule
HMRC must—
(a) assess the penalty,
(b) notify P, and
(c) state in the notice the period in respect of which the penalty is assessed.”

The UT reviewed the FTT's decision and after hearing the arguments for the parties (counsel appearing pro bono on behalf of an absent respondent), decided that the relevant notices sent to Mr Donaldson by HMRC, in the SA Reminder and the form SA326D, satisfied the requirements of para 4(1)(c) of Sch 55 to the Finance Act 2009. HMRC therefore succeeded in the appeal. The penalty of £900 imposed on Mr Donaldson was restored.

The UT observed that HMRC had probably not satisfied its obligations under para 18 4(1)(c) however it did not consider that it should address this issue as this was not the issue under appeal. 


This decision has now been upheld by the Court of Appeal. See Carry On: appealing daily penalties.


Morgan and Donalson v HMRC - First Tier Tribunal

HMRC v Donaldson [2014] UKUT 0536 (TCC) - Upper Tribunal