Tribunal Upholds HMRC Penalties for Late Tax Return Filing

Introduction

The First-tier Tribunal Tax Chamber recently ruled on the case of Mr Mohammed Muhsen Yaqoobi, who appealed against HMRC's penalties for the late filing of his self-assessment tax return for the 2020/21 tax year. The Tribunal upheld the penalties, amounting to £1,600, finding no reasonable excuse for the delay.

Background of the Case

The appeal was heard at Taylor House, London, on 10 October 2024, with the judgment handed down on 24 December 2024. The appellant, Mr Yaqoobi, did not attend the hearing, and was not represented. HMRC was represented by Nicola Shardlow from their Solicitor's Office.

Details of the Penalties

The penalties arose from Mr Yaqoobi's failure to file his 2020/21 tax return by the deadline of 31 January 2022. The return was eventually filed electronically on 10 February 2023, 375 days late. The penalties included an initial £100 penalty, daily penalties totalling £900, and further penalties of £300 each for six and twelve-month delays.

Appellant's Grounds of Appeal

Mr Yaqoobi argued that he was not legally required to submit the return, as he did not receive the notice while living abroad. He also claimed reasonable excuses, including lack of internet access abroad, COVID-19 restrictions, and postal delays.

Tribunal's Findings

The Tribunal found that a section 8 notice was properly served to Mr Yaqoobi's last known address in London. Despite living abroad, the Tribunal deemed the notice served under section 115 of the Taxes Management Act 1970. The Tribunal also found that Mr Yaqoobi had no reasonable excuse for the late filing, as ignorance of the law is not a valid defence.

Reasonable Excuse Consideration

The Tribunal assessed Mr Yaqoobi's claims of reasonable excuse, referencing the case of Christine Perrin v HMRC. They concluded that Mr Yaqoobi's lack of awareness of his obligations as a non-resident landlord did not constitute a reasonable excuse. The Tribunal noted that Mr Yaqoobi could have taken steps to manage his tax affairs while abroad.

Decision and Right to Appeal

The Tribunal dismissed the appeal, upholding the £1,600 penalties. They found no special circumstances to justify a reduction in penalties. Mr Yaqoobi has the right to apply for permission to appeal this decision within 56 days.

Learn More

For more information on tax obligations and penalties, see BeCivil's guide to UK Tax Law.