Burden of proof in penalty cases

HMRC imposed penalties on the taxpayer for the late filing of her self-assessment tax return. She appealed.

In its paper hearing submission HMRC alleged it had sent late filing penalty notices to the taxpayer but the First-tier Tribunal judge said he had not been provided with copies. The department had provided a ‘return summary’ but this gave ‘no clue whatsoever as to whether any penalty notices were generated let alone dispatched’.

The judge said it was for HMRC to justify the penalty but the return summary fell short of being sufficient evidence to prove that a notice to file was sent to the taxpayer. It was well known that HMRC sent notices to file on a ‘staggered basis’ because it would be unreasonable to give Royal Mail the volume of letters if every relevant taxpayer was sent a notice on the same day. The record was therefore ‘improbable and unreliable’.

He...