In Jocuguma Properties Ltd v HMRC [2021] TC8007 and Bennedy's Development Ltd v HMRC [2021] TC8088, the First Tier Tribunal (FTT) partially allowed two appeals against late filing penalties for ATED returns. HMRC had not issued valid notices in respect of the daily penalties charged.

The Annual Tax on Enveloped Dwellings (ATED) is an annual charge on UK dwellings held by a Non-Natural Person, such as a company.

  • ATED is payable annually in advance by 30 April and a return must also be filed by that date.
  • It currently applies to dwellings a taxable value in excess of £500,000.

Although they were heard separately by the FTT the facts in these cases are almost identical. They were heard by the same judge on the same day. The only difference being that the appeal by Jocuguma Properties Ltd was made 18 days late but the judge allowed it as this was not a serious or significant delay.

Jocuguma Properties Ltd and Bennedy's Development Ltd ('the taxpayers') were both liable to file an ATED return for the year ending 31 March 2019 by 30 April 2018. Neither company had previously had to file such a return.

  • As they were unaware of the obligation to file a return they missed the deadline. 
  • In March 2019, their accountants made them aware of the ATED filing requirement and they each filed a return with HMRC on 28 March 2019, over 11 months late. No tax was due.  
  • HMRC issued initial and six-month Late filing penalties and daily penalties totalling £1,200. The taxpayers appealed the daily and six month penalties but accepted the initial £100 late filing penalty. The Grounds of appeal were that the statutory conditions for imposing daily penalties had not been met, the penalties were disproportionate and that they had acted in good faith.

The FTT, in partially allowing both appeals, found that:

  • HMRC had not shown that the daily penalties were imposed in accordance with the legislation (Schedule 55 FA 2009). In fact, the appellants had only raised this argument in filing their reply to HMRC's Statement of Case meaning HMRC had not considered this issue in their own statements.
  • Under Schedule 55, and here the judge followed the decision in Heacham Holidays Limited v HMRC [2020] TC07883, where a return is more than three months late HMRC must provide notice of daily penalties within 90 days of the end of that three-month deadline.
    • Here the notice deadline was 90 days from 1 August 2018, whereas the penalty notifications were not issued until 9 December 2019.
    • The notices were not valid and the appeals in respect of the daily penalties were allowed.
  • The six-month penalties were validly issued as in each case the failure to file a return continued six months after the filing date.
  • The taxpayers may have acted in good faith and simply misunderstood their filing obligations but this ‘bona fide mistake’ did not amount to a Reasonable excuse for their failure to file a return and the six-month penalties stood.

Useful guides to this topic

Annual Tax on Enveloped Dwellings (ATED)
The Annual Tax on Enveloped Dwellings (ATED), originally called the Annual Residential Property Tax, is an annual charge on UK dwellings held by a non-natural person, e.g. a company.

Penalties: Annual Tax on Enveloped Dwellings (ATED)
Penalties for the Annual Tax on Enveloped Dwellings (ATED) regime fall under Schedule 55 FA 2009 (failure to make returns) and Schedule 56 FA 2009 (failure to make payment on time), together with Schedule 24 FA 2007 (penalties for errors).

Adviser's Tax Penalty Planner
A guide to the key direct and indirect tax penalty regimes for returns and payments, excluding VAT.

Appeal: grounds for appeal toolkit
What grounds are there to appeal a tax penalty? How can you word a tax appeal? Can you appeal HMRC errors? What is a reasonable excuse?

Appeals: Late
When can you make a late tax appeal? What conditions must be met?

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 links

Jocuguma Properties Ltd v HMRC [2021] TC8007 

Bennedy's Development Ltd v HMRC [2021] TC8088 



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