Unreasonable demand

The taxpayer was late submitting his 2006/07 self-assessment tax return. In the meantime HMRC determined tax of £17 121 imposed self-assessment late-filing penalties and surcharges for late payment of tax.

HMRC accepted that the actual tax liability for the year was £325.71 but said the taxpayer was out of time to challenge the determination.

The taxpayer claimed special relief under TMA 1970 Sch 1AB on the ground that it would be “unconscionable” under para 3A(4) for HMRC to recover the amount of £17 121 they said was owed.

The First-tier Tribunal said its jurisdiction was limited to considering whether HMRC’s decision had been unreasonable. This had to be done in light of the information that was available to the officer at the time and could not take into account evidence that had become available afterwards.

The tribunal and HMRC agreed that the definition of “unconscionable” included...