In Denise Howarth v HMRC [2025] TC09508, the First Tier Tribunal (FTT) found that a taxpayer who had failed to complete the final step to submit her tax return had a reasonable excuse for not submitting on time.
On 28 February 2021, Ms Howarth (the taxpayer) believed she had submitted her 2019-20 tax return using HMRC’s online service. Due to the COVID-19 pandemic, the tax return filing due date was effectively extended by 28 days for both the 2019-20 and 2020-21 tax years.
- During the filing process, the taxpayer inadvertently opted to receive electronic communications from HMRC.
- This meant statutory notices would now be sent to the taxpayer’s online Personal Tax Account (PTA). A generic email would also be sent to the taxpayer’s registered email address to alert her that a message was waiting.
- HMRC’s records suggest that the 2019-20 tax return was submitted one day late, on 1 March 2021.
- A £100 Late filing penalty notice was sent electronically to the taxpayer’s PTA, but the generic email notification(s) went to her spam folder and were deleted unopened.
- HMRC did not take any steps to collect the £100 penalty. The taxpayer remained unaware that there was an issue and so was unable to challenge the penalty.
- Interest began to accrue on the £100 debt.
- On 28 February 2022, the taxpayer believed she had completed and submitted her 2020-21 tax return; however, she had not actually taken the final step needed to submit the return.
- The images on screen indicated to the taxpayer that there were no further steps to take. The taxpayer took a screenshot as a precaution.
- There was no tax to pay. The taxpayer believed that her 2020-21 tax year obligations were complete.
- Over the following months, a series of notifications were sent to the taxpayer’s PTA, with generic emails sent to the taxpayer’s email address.
- The taxpayer deleted junk mail unopened and, not expecting to receive emails from HMRC, was wary of scam emails purporting to be from HMRC.
- On 23 March 2023, HMRC sent a debt management letter by post to the taxpayer. This alerted the taxpayer that there was an issue with the 2020-21 tax return.
- On 31 March 2023, the taxpayer phoned HMRC and was told that the 2020-21 tax return was not finalised. The call records indicate that the taxpayer was encouraged to submit the return, but did not explain How to appeal.
- The taxpayer promptly submitted her return on the same day.
- During the summer of 2023, the taxpayer received further statements showing her debt (£1,600 plus interest).
- On 24 August 2023, the taxpayer phoned HMRC to restate that she believed she had filed her tax return on time. She was told to make a formal appeal, which she promptly did.
- On the same day, the taxpayer also opted out of electronic communications.
- On 17 January 2024, HMRC rejected the appeal on the basis that it was late.
- The taxpayer responded on 24 January 2024.
- On 31 May 2024, HMRC again rejected the appeal, stating it was Too late.
- The taxpayer appealed to the First Tier Tribunal (FTT) within the 30-day time limit.
The FTT found that:
- It was appropriate for the taxpayer’s appeals to be admitted even though they were late.
- The taxpayer’s signing up to electronic communications was unintentional, and she therefore had good reason to assume any generic email notifications from HMRC were spam and/or phishing exercises.
- Inaction by the taxpayer was not a valid reason for HMRC to consider the case 'closed'. They would have been able to notice that the taxpayer had not accessed her PTA.
- When the taxpayer did become aware that the return had not been submitted, she was not expressly told she needed to make an appeal in respect of the penalties.
- Until 24 August 2023, the taxpayer reasonably believed the problem had been resolved by submitting the return.
- On becoming aware of the need to appeal, the taxpayer promptly did so.
- The taxpayer had acted in an Objectively reasonable way, and her failure to submit the tax return until 31 March 2023 was objectively reasonable.
- The FTT was guided by Perrin v HMRC [2018] UKUT 156 (TCC).
- The taxpayer had demonstrated she was conscious of, and intending to comply with, her tax obligations.
- The taxpayer’s belief that she had submitted her return was reasonable.
- It was reasonable for the taxpayer not to have checked her PTA and been unaware of the problem until March 2023.
- As soon as the taxpayer became aware the return had not been submitted, she remedied the failure without unreasonable delay.
The taxpayer’s appeals were upheld.
Useful guides on this topic
Penalties: Late Filing
Late returns can be subject to a mix of fixed and tax-geared penalties. What penalties apply for late filing? Which penalty will apply and when?
Appeal: How to appeal a tax penalty
How do you appeal against a tax penalty? What are your rights of appeal if HM Revenue & Customs (HMRC) have assessed you for a tax penalty?
Client guide: Reasonable care and tax penalties
What triggers a tax penalty? What standard of care is expected from a taxpayer? What is reasonable care? When is an error careless?
Grounds for Appeal: Reasonable excuse
What is considered to be a 'reasonable excuse' when a taxpayer makes an appeal against a tax compliance failure?
Appeals: Late
When can you make a late tax appeal? What conditions must be met?
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