Was the return validly served?

The trustees of an interest in possession trust in which all the income is paid directly to the life tenant did not file a return for 2010-11 until September 2012 so HMRC charged penalties. The trustees appealed.

On delivering a return the First-tier Tribunal said TMA 1970 s 8A provided that HMRC could give notice to a trustee to file a return. The meaning of relevant trustees was in s 7(9). It used the word ‘persons’ in relation to trustees and s 7(2) assumed they would be chargeable.

However as was the position in this appeal no chargeable income or gains had arisen on the trustees and therefore s 7 was ‘of no effect and there was no obligation on anyone to notify’. As a result no one could be penalised for failing to deliver a return.

In case he was wrong on...