In Mary Walker v HMRC [2015] TC04646 the First Tier Tribunal reduced the penalties for late filing of a P35 on the grounds of reasonable excuse as HMRC had advised the appellant that they would accept the information submitted on paper.  

Background and timeline:

  • Ms Walker failed to submit her P35 on time for 2009/10 and 2010/11.

  • She first contacted HMRC to discuss the online submission of the Returns on 27 May 2011, seven days after the filing deadline for 2010/11.

  • She then encountered a number of difficulties in uploading the required information and was advised by telephone that she could submit the information on paper along with an explanation, which she did by letter dated 16 July 2011.

  • HMRC wrote to her in December 2011 advising that the information was not in the correct format.

  • HMRC issued penalties totalling £1,200 in respect of the 2010/11 return in February and May 2012.

  • Ms Walker made an appeal to HMRC against these penalties in December 2014 having still not submitted the forms.  HMRC advised that she was out of time and she appealed to the Tribunal.

Tribunal discussion and decision:

The Tribunal decided to allow the late appeal, saying that allowing it would not prejudice HMRC as they should have been aware that the penalties were being contested, but that denying it would deprive Ms Walker of the opportunity to make her case.

The penalty for failure to submit the P35 is £100 per month or part month for which the failure continues, and so as Ms Walker had failed to submit her P35 for a full year, the maximum penalty of £1,200 was due.

Ms Walker could only avoid the penalty if she had a reasonable excuse for the failure to file the return, and a reasonable excuse for continuing not to file the return.

The tribunal decided that:

  • She did not have a reasonable excuse for failing to submit the P35 on time.  She should have known in advance of the deadline that she had an obligation to file online and have taken steps to obtain the relevant passwords.

  • She did have an excuse for failing to file from 16 July when she sent her letter to HMRC after being advised that she would be treated as having met the requirements if she sent her information in paper form.

  • This excuse ended in December when HMRC advised her that the information submitted was not in the correct format.  Had she filed as soon as possible thereafter the excuse would have continued, but she did not.

The tribunal therefore reduced the penalties by £400, for the months August, September, October and November 2011 but upheld the remaining £800.


This case confirms that reliance can sometimes be placed upon HMRC guidance when considering whether a reasonable excuse exists; however, guidance can only be relied upon for as long as the taxpayer has reason to believe it is correct.

Case reference Mary Walker v HMRC [2015] UKFTT TC04646