In Johnston v HMRC [2017] TC06238, the First Tier Tribunal (FTT) held that no penalties were due as HMRC had sent the notice to file to the incorrect address.

No Schedule 55 FA 2009 late filing penalty can be due where the tax return (or notice to file) was not issued to the taxpayer, which includes where it was sent to the wrong address.

  • Mr and Mrs Johnston emigrated to the US and let out their UK property. 
  • Mrs Johnston filed a Return for 2011/12.
  • HMRC issued a notice to file to Mr Johnston for 2012/13, which was sent to their old address and redirected to the new one. He filed the return, noting the change of address and that the property was in joint names.
  • According to HMRC’s records, Mrs Johnston was issued with notices to file for 2012/13, 2013/14 and 2014/15, but these were not received.
  • In all years the profits were covered by Mrs Johnston’s personal allowance.

There was some confusion between HMRC and the taxpayer over the appeal process, the tribunal used its powers to allow a Late Appeal.

HMRC redacted portions of the evidence they provided to the FTT, and did not supply a printout of their address record. There was insufficient evidence to show the address to which the notices to file were issued. The FTT found that as other papers had been sent to the old address (Mr Johnston was passed a reminder by the new occupants in 2016) that HMRC had not sent the notices to file to the correct address.

Hence no penalties could be due.

HMRC tried an alternate argument that Mrs Johnston had failed to notify chargeability. The FTT described this as a “two edged sword”, given that a person who has received a notice to file is “under no obligation to notify chargeability”. 

The FTT also helpfully referred the taxpayer to the McGreevy case, regarding her obligations in the event she and her husband sold the property.

External link:

Johnston v HMRC [2017] TC06238


Rachel McGreevy v HMRC [2017] TC06109

Penalties: Late Filing

How to appeal a tax penalty (subscribers)

Penalties: Failure to notify chargeability