In the first two penalty appeals concerning the Annual Tax on Enveloped Dwellings (ATED) regime, the FTT finds that ignorance of the law is not a "reasonable excuse" for late filing.

In Lucas Properties Limited V HMRC [2015] TC04374 a company purchased a high value residential property on 29 November 2013.

  • Its first ATED return was due within 30 days of acquisition, by 29 December 2013.
  • The next return due was for the year to 31 March 2014, was due by 30 April 2014.
  • It did not file a return until 31 July 2014.

HMRC assessed £1,300 in penalties under schedule 55 FA 2009 on the basis that the first return was six months late (£100 + £10 x 120 days) and the second 3 months late (£100).

The company appealed on the basis that it was unaware of its ATED filing requirements, and that penalties were both unfair and disproportionately high.

The tribunal found that:

  • Ignorance of the law does not constitute a reasonable excuse.
  • In the absence of any reasonable excuse it had no power to adjust the penalties.
  • The issue of proportionality cannot apply to fixed penalties.

It upheld the penalties.

In Monaco Group of Companies v HMRC [2015] TC04373 the taxpayer lodged an appeal on the basis that it did not understand the law, the the facts, circumstances and outcome was similar to Lucas Properties.


Despite the "power" of the internet, word is clearly not spreading as well as it should when it comes to the new ATED return filing regime. High value residential property owners have filing obligations in terms of both payment of the ATED and also in order to claim exemption from the new regime. Without doubt there will be further cases like these.

In order to make a successful appeal it is necessary to demonstrate that the penalties have not been applied correctly (technical failure) or that the taxpayer has a reasonable excuse for their failure.

Links to guidance on this topic:

Links to cases above: