Was a return issued to enforce a tax liability valid under TMA 1970, s 8?

Mr G was an employee taxed under PAYE. For 2011-12 and 2012-13 the PAYE system did not deduct enough tax and there was an underpayment of £624.60. Mr G agreed to pay this under a time-to-pay arrangement but defaulted after the first three payments. HMRC sent him a notice to file a return for 2011-12. The filing date was 9 August 2014 but the return was not filed until November 2014. A return notice was also issued for 2012-13 and that return was also filed late.

HMRC charged late return penalties and Mr G appealed. The First-tier Tribunal quashed the penalties (see ‘When is it a tax return?’) on the basis that the return was ‘not issued for the purpose of establishing the amount in which a person is chargeable to income tax … for a year of assessment and the amount payable by him...