Penalty system is to deter late returns

The taxpayer failed to file an annual tax on enveloped dwellings return for 2018-19 because it was unaware of the obligation to do so. Eventually the return was filed 11 months late. HMRC imposed a late filing penalties. The taxpayer accepted the initial £100 fine but appealed against the six-month and daily penalties on various grounds including that they were disproportionate given there was no loss of tax the taxpayer said it had acted in good faith it had not gained from the late filing it paid the £100 penalty promptly and HMRC had not had to chase it for the return.

The First-tier Tribunal accepted the taxpayer had made a genuine mistake but said the legislation did ‘not provide shelter for mistakes only reasonable excuses’. It was true the taxpayer had not gained from the late return nor had any tax been lost but these...