In Blackhorse Property Management Ltd v HMRC [2016] TC05449 the First Tier Tribunal (FTT) upheld but reduced a penalty for failing to register under the money laundering regulations.

For money laundering purposes estate agents are under the supervision of HMRC, and have to register with them before starting to carry on business.

Failure to register can result in a fixed penalty, which is reduced for prompted or unprompted disclosure.  No penalty will be charged if all reasonable steps are taken to ensure compliance with the registration requirement.

  • HMRC first wrote to the Blackhorse Property Group Ltd in June 2015 to say that they appeared to be carrying out an estate agent business but had not registered with them.
  • A registration form was submitted in the name of Blackhorse Property Management Ltd in August 2015, stating that it had started its estate agent business in April 2015.
  • HMRC issued a penalty for a fixed amount for late registration (reduced for prompted disclosure) and fees for the period between starting the business and registration.

There was a change of director shortly after, and he appealed the penalty on the grounds that:

  • He was not a director at the time, and the previous director had been unaware of the requirement to register
  • The registration was not late in any event: the estate agent business only started in September 2015.

The FTT found that the penalty was valid, but that it should be reduced:

  • Ignorance was no defence: a person who had taken all reasonable steps would have been aware of the registration requirement.
  • The evidence did not support the estate agency business starting in September 2015: the website showed involvement with property sales before then, and there was no reason to suspect that the date given on the registration form was wrong.
  • The registration was unprompted. Initial letters from HMRC were addressed to a different company with a similar name at the same address: any prompting had been of the wrong company.


The FTT was very scathing of HMRC handling of the case, including in an appendix a number of observations which, whilst not necessary for their decision, were matters for concern.

These included errors in letters and confusing statements about deadlines and requirements.  The FTT took particular issue with HMRC’s wording of the right to review and appeal. They did not use this to declare the penalty appeal invalid, but threatened that “HMRC have now been warned where their sloppy wording may lead them”.


Case reference: Blackhorse Property Management Ltd v HMRC [2016] TC05449

Our subscriber guide: Money Laundering Regulations: Accountants' Registration