Taxpayer was not negligent

The taxpayer included income from property in her 2010/11 tax return but made an error in the calculations resulting in a claim for losses to which she was not entitled.

HMRC imposed a penalty of £435 saying the taxpayer had made a careless or negligent error.

The taxpayer appealed. She denied being careless and said she had a reasonable excuse if there was a negligent error in the return: she had relied on an adviser to deal with her tax affairs.

This was not an excuse the Revenue claimed because the adviser had been in contact with the taxpayer about her property income in respect of the previous year.

The First-tier Tribunal said the tax department had made a “powerful argument” but it was the “state of mind or state of knowledge of the appellant” that mattered.

She relied on her tax agent to act...