Special circumstances to reduce late filing penalties

The taxpayer was a self-employed contractor. He was charged late filing penalties totalling £1 300 for 2017-18 as the return was not filed until 24 July 2019. There was some considerable confusion about whether a notice to file had been issued and some conflicts of evidence between the taxpayer and his agents. The taxpayer appealed against the penalty on the grounds that he thought that his accountants were dealing with the return and that the penalty would cause hardship. It was eventually established that HMRC had issued a notice to file. It had also issued a paper return on 16 July 2019 which the taxpayer had submitted only 9 days later.

The tribunal held that the penalties were properly charged and that the taxpayer did not have a reasonable excuse. However it said that HMRC had not properly considered whether there were special circumstances. HMRC should in the...