In Hannah Armstrong v HMRC [2018] TC06606 a late penalty appeal was allowed and late filing penalties quashed by the First Tier Tribunal (FTT); HMRC's penalty notices and notices to file sent electronically did not meet all of the conditions for electronic communication so were not validly delivered.

When HMRC validly issues a notice to file a self-assessment return under s8(1) TMA 1970 :

  • Failure to file a return or filing a late return will result in an automatic penalty (schedule 55 FA 2009).
  • Where a notice is sent by electronic communication then the Income and Corporation Taxes (Electronic Communications) Regulations 2003 (SI 2003/282) (“the regulations”) apply:
    • Information sent to a secure mailbox is only deemed delivered if the despatch of the message is:
      • recorded on an official computer system, and
      • an email has been sent to the persons last verified email address notifying them that the information has been sent to their secure mailbox which is not returned undelivered.
    • HMRC may only use electronic communications for notices to file and penalty assessments if the recipient has given their consent and the conditions of the regulations (see above) are met. 

Hannah Armstrong had signed up for paperless contact with HMRC.

  • She was sent a notice to file a 2015/16 return and late filing penalty notices totalling £1,300 by electronic communication to a secure mailbox on her self-assessment online account.
  • She filed her 2015/16 return on 13 December 2017. Returns were on time for previous years.
  • On 21 December 2017 she appealed to HMRC against £1,200 of the penalties (excluding the initial penalty of £100). HMRC refused the notices of appeal as being out of time.

The FTT, following the Martland case on late appeals, granted leave to appeal; there was a good reason for the delay, the penalties were harsh and whether the notices had been properly served was questionable.

In the interests of achieving an efficient use of the tribunals time and resources the judge went on to consider the appeals themselves, which he allowed:

  • The appellant had, in consenting to paperless contact, given her consent to receive notices to file by her secure HMRC mailbox but as she was not a tax expert she could not be expected to realise (and it had not been spelt out by HMRC):
    • that penalty notices would be sent to the mailbox.
    • that emails notifying her of new mail to that mailbox would not specify that the mail was a penalty notice (or tell her anything about what the mail related to at all).
  • She had not consented to receive penalty notices electronically and the requirements of the regulations had not been met.

Although not necessary to determine the appeal, the judge examined whether HMRC had proved that the penalty notices had been despatched and could be deemed delivered. He found that they had not, only the notification emails were proved despatched. He cancelled all penalties including the £100 which the appellant had not appealed.


Appeals: late appeals 

How to appeal a tax penalty 


Hannah Armstrong v HMRC [2018] TC06606 


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