Taxpayer fined for filing tax returns 500 days late

Taxpayer fined for filing tax returns 500 days late

Feb 9, 2024

A taxpayer has lost an appeal related to a demand for £1,400 in penalties for late income tax self assessment forms which were filed years late

The penalties related to two tax years when Sarah Goodman was late in filing returns for the tax years 2018 and 2019 issued under schedule 55 of the Finance Act 2009. On 12 April 2023, the appellant appealed the penalties.

An automatic penalty is issued when a tax return is filed one day late and after three months this increases by £10 a day for a total of 90 days from the day HMRC notifies the taxpayer. If another six months go by without paying this off, a further penalty of £300, or 5% of the tax liability if more than £300, is charged. This is then repeated if payment has still not been made after 12 months.

Both tax returns in dispute at the First Tier Tribunal (FTT) were over 12 months late, with Goodman receiving a £700 penalty for each tax year. A further two years of penalties were cancelled by HMRC.

Goodman received a notice to file a self assessment return on 10 January 2020 for the tax year ending 5 April 2018. This was not filed until 27 October 2021, making it 559 days late.

On 16 January, Goodman received the notice to file for the 2019 tax return, which was received on the same day as the 2017 tax year, 553 days late.

Goodman claimed that she was placed on the self assessment regime by error as she should not have had to file one. However, she had registered for self assessment as a sole trader in 2019.

Mr R Carey, the appellant’s representative, argued that Goodman was working for a non-compliant employer, and did not provide payslips, or a P60, but still maintained the appellant was employed and not self-employed. There was also an argument over the penalties compared to the income.

The income for the 2017-18 tax year was £4,130 from employment and £6,880 from self employment. For 2018-19 the employment income was just £1,551 and for self employment was £8,424. No corrections from the appellant were submitted to HMRC before the penalties were issued.

Tribunal judge Kelvan Winterton said: ‘We find that the appellant made no attempt to correct the information detailed on the tax returns for 2017-18 and 2018-19 in relation to profit from self employment.

‘We were not provided with any sound explanation at the hearing or otherwise as to why the tax returns for 2017-18 and 2018-19 detailed profit from self employment in error.

‘We find it difficult to understand why the appellant did not do anything at all, after receipt of the notice to file self assessment tax returns.’

Goodman’s appeal was dismissed at the FTT with no reductions made for her circumstances with the judge stating: ‘The late filing penalties totalling £1,400 have been charged in accordance with legislation and no reasonable excuse has been shown for the failure of the appellant to file her tax returns on time.’