In Margott as representative member of MDL Property Consultants LLP v HMRC [2017] TC06278, the First Tier Tribunal (FTT) held an LLP is not required to file a partnership return, but also gave a number of alternate judgments removing late filing penalties on the basis that the taxpayer had a reasonable excuse.

If a tax return is not filed by the due date, HMRC can charge Late Filing Penalties; for a partnership or LLP these are charged on each partner. There are a number of potential Grounds of Appeal, of which the broadest category is that the taxpayer had a Reasonable Excuse for the tardiness.

The registered office of the LLP was at their adviser’s office, with whom they had a falling out, which resulted in post arriving at the advisers and not being forwarded to the LLP and the LLP being unable to access its records. As a result, the 2011/12 Partnership Return was filed late, giving rise to fixed penalties of £400 and daily penalties of £900 on each partner.

The nominated member appealed on behalf of the partnership but this was held behind Donaldson due to the daily penalties aspect.

The FTT Found:

  • As an LLP is not a partnership and its members are not partners, TMA 1970 does not provide authority to issue a tax return to an LLP (a consequence of the decision of the Court of Session in Spring Salmon and Seafood Ltd [2004] ScotCS 39)
  • HMRC had failed to demonstrate that the LLP had not tried to ensure the Return was filed on time. Once they had changed the registered office and rebuilt the records, the Return was filed promptly. As such, the dispute with their advisers gave the LLP a reasonable excuse.
  • A sleeping member with no management commitment or voting rights, reasonably relied on the nominated member. This gave him a reasonable excuse for late filing.
  • HMRC had not demonstrated that they had complied with the legislation to issue daily penalties.
  • HMRC had not given any reasoning for their decision that the dispute with the LLP’s advisers did not amount to special circumstances. The FTT would, therefore, have found that this decision was flawed.


HMRC noted that the LLP did not contact them prior to the deadline to advise them of the issue, and took the view that this was not the action of a “reasonable” person. Presumably the case would not have needed to go to the FTT if the LLP had contacted them in advance.


How to appeal a tax penalty (subscriber version)

External links

Margott as representative member of MDL Property Consultants LLP v HMRC [2017] TC06278