In Udlaw Limited v HMRC [2020] TC07548, the First Tier Tribunal (FTT) found that a VAT penalty for ‘careless’ inaccuracies was not ‘careless’.

The FTT concluded that the appellant had taken reasonable care in completing her returns in the light of her special circumstances. The appeal was allowed.


Penalties may be charged on inaccurate returns that are either as a result of not taking reasonable care or deliberate carelessness. Should these factors result in an understatement of tax, a false or inflated statement of a loss or a false or inflated claim to repayment of tax penalties can be applied.

Whilst a penalty cannot be dismissed simply because it is harsh, taxpayers should resist penalties if there is no evidence of not taking reasonable or deliberate care. Appeals for penalties are done within 30 days of the date on the notice of penalty assessment.


VAT: how to reconcile your turnover to your returns
An example of how the reconcilation works in practice

How to appeal an HMRC decision
What type of decision is appealable? What are your different options when you disagree with HMRC? What are the key steps in making an appeal?

Penalties for Error and Mistake
What penalties apply if you make an error or mistake? How are penalties calculated? How do you check penalties? What can you do if you receive a penalty?

Furnished Holiday Letting 
Furnished holiday letting (FHL) is an activity which has for many years been subject to a favourable set of tax rules: it has been treated, by default, as trading for Income Tax purposes.

External links

Udlaw Limited v HMRC [2020] TC07548