Is it possible to draft a successful appeal in under two hours? Why did a statutory review fail to spot the errors in HMRC's penalty case?

The facts

  • Taxpayer formed a UK company and registered as a director shortly after arrival in the UK in 2015.
  • Company set up PAYE scheme via its accountants.
  • Director moved house at the end of 2015 and in 2017, he notified Companies House of his changes of address.
  • Director was paid salary (below his personal allowance) and dividends (no liability). Processed by his accountants.
  • HMRC set him up a self assessment record but he did not receive any notification (he had moved house and HMRC did not use the Companies House data).
  • In 2016/17 his earnings levels increased and he correctly notified HMRC of his chargeability in October 2017.
  • In 2018 discovered that HMRC had issued a request for him to file a 2015/16 tax return.
  • He filed his 2015/16 return in March 2018.
  • HMRC issued penalties for £1,300.
  • The taxpayer only received one penalty assessment for £300.

Appeal to HMRC

The taxpayer's appealed to HMRC (via his accountant) and claimed, at some length a reasonable excuse for the failure: 

  • he did not receive any correpondence from HMRC
  • he was a director but that did not mean that he had to automatically register for self assessment

Both were rejected by HMRC's case officer

Statutory review

HMRC made an offer of a Statutory Review of the case. The reviewer rejected the reasonable excuses and failed to note that there appeared to be an absence of penalty notices or that they had been miscalculated or that there was no legal basis for HMRC requiring a director with no taxable income to file a return.

Our appeal to the tribunal

In working backwards we could see that the tax geared penalties were incorrectly calculated (no tax due).

We could not see whether the penalty notices were correctly issued as there were no copies of the assessments.

We failed to see why the claim for reasonable excuse did not succeed.

Grounds for appeal (in summary)

1. No requirement for a director to file a Self Assessment return.

2. No requirement to notify chargeability for 2015/16 as no taxable income.

3. Director had notified changes of address via Companies House and via his annual payroll: he was unaware that he had been put into Self Assessment.

4. He did not receive notice to file or assessments.

5. Director relied on adviser who did not tell him that he needed to notify HMRC earlier (there was no need to notify HMRC anyway).

6. The amount of the penalties was probably miscalculated.

7. The penalties themselves could have been defective for other reasons so we appealed that too: no copies of the assessments.


The tribunal wrote to say that HMRC are not going to pursue the case.

The taxpayer has a claim for costs if he wrote to the Adjudicator but it appears is not pursuing it.


A key problem is that Schedule 55 FA 2009 late filing penalty regime is that it is meant to be as easy as 'tick the box' and it's not, either for HMRC, or for taxpayers.

How much time do you want to spend on your appeal? Before we got involved there were three letters to HMRC and then a statutory review.

We managed our side: a review of the papers and an appeal in two hours. That was tough going but we know the rules.

It seems that there is poor training on penalties at HMRC and the statutory reviewer was unaware of the results of the last couple of year's tax penalty appeals.

Useful Links

Grounds for appeal: Reasonable excuse

Appeal: grounds for appeal

How to appeal a tax penalty (subscriber version)

Penalties: late filing