In Brocklesby v HMRC [2020] TC07970,  the First Tier Tribunal (FTT) upheld the appeal against late filing penalties by a low-income taxpayer: HMRC's misleading advice and internal delays contributed to the amount of penalties incurred.

John Brocklesby was self-employed and a low-income taxpayer. He had been filing tax returns since 1996:

  • Until 2014, when his local HMRC office closed, each return was filed with the assistance of HMRC.
  • He subsequently filed online but had encountered technical difficulties.
  • In March 2018, he contacted HMRC regarding an initial late filing penalty and requested an activation code to file online. He was told that he was not registered for online filing. There was no evidence on HMRC's systems as to why he had ceased to be registered, nor that they had informed him that this was the case.
  • Later in March, he contacted HMRC again to inform them that he was having difficulties filing online as he had no computer and no mobile phone. He was advised to file a paper return and that there were currently no penalties to pay.
  • On 10 April, after being unable to download a paper copy, one was sent out to him by HMRC.
  • On 16 May, HMRC received the Self Assessment page only. They wrote to advise him to send the full return on 6 July, seven weeks later.
  • On 14 July, he further queried the penalty letters over the phone with HMRC and was told that they were automatic letters and that there were no late penalties on his account. He was told to send in the full return.
  • On 9 August, he returned the full tax return unsigned. HMRC sent this back on 28 September, another seven weeks later. The completed, signed return was received on 30 October.
  • The penalties were appealed to HMRC on 4 September. HMRC issued their decision dated 18 December. After HMRC review, the appellant appealed to the FTT.

HMRC contended that:

  • As he had been filing tax returns since 1996 and had filed online previously, Mr Brocklesby should have known what he was doing.
  • He had previously filed late and a prudent person would not leave the return until the last minute.
  • If having difficulties, an agent could have been instructed to assist. 

The FTT found:

  • In deciding whether there is a Reasonable excuse, regard should be given to all of the circumstances, including the experience and situation of the individual taxpayer.
  • HMRC had not advised Mr Brocklesby of the penalty consequences of filing a paper return as opposed to an online return. At the time of the conversations in March 2018, a paper return would already be subject to a six-month penalty and daily penalties.
  • There was no evidence of deliberately filing incomplete returns and there was evidence that Mr Brocklesby had encountered difficulties filing his return.
  • Fourteen weeks of delay were attributable solely to HMRC. Although errors were made by Mr Brocklesby, he attempted to remedy them far quicker than HMRC did.
  • It should not be a requirement for someone with a taxable income of £3,500 to require an agent to assist with their tax affairs. 

The FTT found that Mr Brocklesby did have a reasonable excuse and the appeal was upheld in full.

Useful guides on this topic

Late filing an SA return: Automatic penalties 
Income Tax Self Assessment filing deadlines and automatic penalties that will be applied. regardless of tax liability.

Penalties: SA late filing, payment, notification and error 
Self Assessment (SA) tax penalties: what penalties are due for outstanding tax returns? What penalties are due for late payment?

How to appeal a tax penalty
What are the steps in making an appeal? What should your appeal cover? What does recent case law say on this topic? This guide summarises the process for appealing a tax penalty. 

Grounds for appeal: Reasonable excuse 
What is considered to be a 'reasonable excuse' when a taxpayer makes an appeal against a tax compliance failure?

External link

Brocklesby v HMRC [2020] TC07970

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