HM Insights

Taxpayers must check HMRC email Penalty Notices

Taxpayers are being urged to check their online accounts after the First-tier Tax Tribunal upheld penalties for the late filing of a self-assessment tax return.

In Robinson-Lane v HMRC, the taxpayer had opted to receive paperless correspondence from HMRC. After her self-assessment tax return was not filed on time, the taxpayer, therefore, received penalty notices to her online account rather than in paper form. A non-electronic/paper return must be filed by 31 October following the end of the relevant tax year, whilst for an electronic return, the deadline is three months later (31 January). If a return is filed late, a fixed penalty of £100 is imposed. In addition, if the return has still not been filed after three months from the relevant filing date, there are daily penalties of £10 up to a total of £900. Moreover, further penalties are imposed if the return has still not been submitted after six months (£300) and after a year (again, £300). The penalties are cumulative and can soon add up - the penalties imposed on this taxpayer totalled £1,300.

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Penalties for late returns do not arise if the taxpayer can show that they had a reasonable excuse for the failure and put it right without unreasonable delay once that excuse ended. The taxpayer here tried to appeal the penalties on this basis since she thought she had submitted her return online on 28 January and only became aware that it had not been received nine months later because she had not received paper penalty notices or seen the online notices. Moreover, the taxpayer had resubmitted the return as soon as she realised the error.

The test as to whether the excuse is reasonable is an objective one and in Robinson-Lane the Tribunal considered that it was not objectively reasonable in the circumstances to have failed to read messages sent to the online account – which here included penalty notices. The Tribunal commented that it must have been obvious that by selecting paperless correspondence, all paper correspondence would cease, including penalty notices.

Taxpayers who have opted for paperless correspondence must, therefore, ensure that HMRC confirms receipt of their tax return and regularly check their online accounts for any indication that these have not been submitted. Failure to do so may result in unknowingly racking up fines for late returns.

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If you need further help with your self-assessment tax return, please contact our Tax Department.