In Errol Almond v HMRC [2017] TC05889  concerned discovery assessments covering 13 years and associated penalties for failure to notify. The assessments were reduced to 5 years and the penalties were discounted once the tribunal had reviewed the evidence, although full abatement was not given.

  • The taxpayer failed to declare rental income and HMRC issued discovery assessments covering a 13 year period and assessed penalties at 50% of potential lost revenue.
  • The taxpayer appealed against the assessments and level of penalties.
  • Following an initial hearing HMRC withdrew many of the years and it transpired that the taxpayer's undeclared income was less then £5k.
  • The years in question were 2002/03 to 2006/07
  • Penalties for failure to notify were under s7(8) TMA 1970 (the old penalty regime).
  • Section 100B(2)(b)TMA 1970 gives the tribunal the power to amend the penalty determination to such amount as it considers appropriate.

Penalties are taken as 100% of tax due and HMRC applied an overall abatement of 50%. This was increased to 70% by the First Tier Tribunal:

  • For disclosure on challenge, 15% out of a maximum of 20%: the FTT gave no further discount as his initial disclosure was good but incomplete.
  • For co-operation with the check, 15% out of a maximum of  40%: the FTT reduced to 25% the taxpayer tried to resolve the issue and answer the questions but could have been more helpful, as was evident from the high quality of information provided to the tribunal. HMRC had HMRC issued information notices to obtain information on receipts, this was not entirely necessary as it considered that HMRC could have simply taken a view about these. 
  • For seriousness, 20% out of a maximum of 40%  the FTT reduced these to 30%. His conduct was a simple failure to notify chargeability.  He had never attempted to disguise the income.  

Total reduction reduced from 50% to 70%.


For tax years from 6 April 2010 the s7(8) Penalties for failure to notify regime was superceded by schedule 41 FA 2008. Under both old and new rules co-operation and disclosure are key factors. This taxpayer seems to have hung back on making his initial disclosure which naturally raised HMRC's suspicions. Based on what we can deduce this taxpayer would have benefited from taking professional advice at an early stage in the enquiry.

 Links to our guides

Penalties for failure to notify

Grounds for lodging a tax appeal

How to appeal a tax penalty

External links

Errol Almond v HMRC [2017] TC05889


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