Gerrit Wals v The Commissioners for HMRC

This is a revised decision of the Tribunal following a review conducted pursuant to Rule 41 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009.

The appellant’s appeal in this matter was heard on 29 October 2025 by way of an online video hearing by Judge Nigel Popplewell and Miss Patricia Gordon. As can be seen from the text below, HMRC considered that the appellant had been late in filing individual tax returns for tax years 2010/2011, 2011/2012, 2012/2013 and 2014/2015. They therefore visited penalty assessments on the appellant under schedule 55 Finance Act 2009 for each of those years. A decision notice giving full findings of facts and reasons was released on 7 November 2025 (the "Decision").

The Decision allowed the appeal against the penalty for the tax year 2010/2011 but dismissed the appeal against the penalties in respect of the other years.

By notice dated 24 December 2025 the appellant’s representative, Ross & Company (“the representative”), applied on the appellant's behalf for permission to appeal the Decision to the Upper Tribunal.

The grounds of that application were that having concluded that the appellant had never received valid notices to file for those periods, and correctly identified that the returns were therefore voluntary returns and thus treated as having been made in response to a notice given by HMRC under section 8 TMA 1970, the tribunal made an error of law in failing to recognise that the filing date did not arise until the date on which the returns were submitted, and were thus not filed late.

If that was correct, then none of the tax returns were filed late and thus the appeal should have been allowed in respect of all periods.

In their application to appeal, the representative asked us to review our decision in light of their foregoing grounds of appeal. We therefore considered, in accordance with Rule 40(1) of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009, whether to review the Decision and decided to undertake a review as we were satisfied that there was an error of law in the Decision.

We have therefore decided, in accordance with section 9(4)(c) of the Tribunals, Courts and Enforcement Act 2007 to set aside those parts of the Decision which relate to the penalties for the periods, 2011/2012, 2012/2013 and 2014/2015 and to re-decide those matters.

This decision has been considered in draft by the parties who have both confirmed that they are satisfied with it and with the outcome of our review.

This decision deals with an appeal against late filing penalties (“the penalties”) visited on the appellant under Schedule 55 Finance Act 2009 (“Schedule 55”) for the late filing of individual tax returns for the tax years 2010/2011, 2011/2012, 2012/2013 and 2014/2015.

Details of the penalties which amount in total to £4,500 are set out in the table in the appendix.

For the reasons given later in this decision we have decided that the relevant returns were not made late and so Schedule 55 cannot apply. We have therefore allowed the appeal.

There was no dispute about the legislation which is summarised below:

Under Section 8 Taxes Management Act 1970 (“TMA 1970”), a taxpayer, chargeable to income tax and capital gains tax for a year of assessment, (year 1) who is required by an officer of the Board to submit a tax return, must submit that return to that officer by 31 October immediately following the year of assessment (year 2) (if filed by paper) and 31 January in year 2 (if filed on line).

However, this general rule is amended in certain circumstances. Under section 8(1F) TMA, if a notice to file in respect of year 1 is given after 31 July in year 2 (but on or before 31 October) a return must be delivered within three months of the date of the notice (for a paper return), or on or before 31 of January in year 2 (for an electronic return).

Under section 8(1G) TMA, where the notice to file is given after 31 October in year 2, the return (whether electronic or not) must be delivered during the period of 3 months beginning with the date of the notice.

Under section 12D TMA 1970, voluntary returns (i.e. returns which are not submitted in response to a notice to file) are treated as having been made in response to such a notice which was given to the person on the same date as the return was received by HMRC.

Failure to file the return on time engages the penalty regime in Schedule 55.

Penalties are calculated on the following basis:

In order to visit a penalty on a taxpayer pursuant to paragraph 4, HMRC must decide if such a penalty is due and notify the taxpayer, specifying the date from which the penalty is payable (paragraph 4).

If HMRC considers a taxpayer is liable to a penalty, it must assess the penalty and notify it to the taxpayer (paragraph 18).

A taxpayer can appeal against any decision of HMRC that a penalty is payable, and against any such decision as to the amount of the penalty (paragraph 20).

On an appeal, this tribunal can either affirm HMRC's decision or substitute for it another decision that HMRC had the power to make (paragraph 22).

The relevant case law is set out below:

In order to visit a daily £10 penalty on a taxpayer under paragraph 4 of Schedule 55, HMRC must make a decision that such a penalty should be payable and give an appropriate notice to the taxpayer.

These issues were considered by the Court of Appeal in Donaldson v HMRC [2016] EWCA Civ 761 ("Donaldson").

The Court of Appeal decided that:

We were provided with two bundles of documents. The first, the main hearing bundle, comprised some 276 pages including authorities. The second, a supplementary bundle which ran to 19 pages, contained documents sent by HMRC to the appellant’s agent on 11 June 2025. The appellant gave oral evidence. We find his evidence to be entirely credible and reliable. From the relevant documentary and oral evidence, we find as follows:

When the appellant came to the UK from Holland some years ago, he was advised that he should retain the services of a chartered accountant to assist with his accounts and tax affairs. He did this, and for the years in question, instructed Mr Smith, a chartered accountant, to undertake these tasks.

The appellant was conscious of his obligations towards the UK tax system and HMRC and wanted to ensure that he had no problems with them.

Both the appellant and Mr Smith were fully aware of the deadlines within which a self-assessment tax return should be submitted to HMRC. Accordingly, the appellant would submit the relevant information to Mr Smith in good time, and this would be followed up by a face-to-face meeting with Mr Smith at which that information was discussed and clarification (if needed) sought regarding expenses and other matters.

Mr Smith would prepare the appellant’s self-assessment tax return which the appellant would sign. It was Mr Smith’s responsibility to submit that return to HMRC.

It was the appellant’s evidence that once he had signed the return, he assumed that Mr Smith would submit the return on a timely basis.

On no occasion did Mr Smith mention to the appellant that he was having any difficulties with HMRC.

It was the appellant’s evidence that there was nothing which put him on notice that Mr Smith was not doing what he had been instructed to do, namely to file the relevant tax returns on a timely basis.

If the appellant received correspondence from HMRC during the course of the year, he read it and passed it on to Mr Smith for Mr Smith to deal with. Although he could not remember doing this, he thinks it is more than likely that this was what he did when he received the late filing penalty notices from HMRC.

Mr Smith suffered from poor health and passed away some years ago and the appellant now instructs Mr Ross, also a chartered accountant. Since instructing Mr Ross, there have been no issues with HMRC.

The appellant is paying approximately £40 a month to HMRC on a voluntary basis having been advised to do so in respect of the outstanding penalties.

Having heard nothing from HMRC regarding the penalties after 2016, he assumed that they had been waived or rescinded. It came as some shock to him when debt collectors started chasing him for the money.

The dates on which his tax returns were actually filed are set out in the appendix.

HMRC’s electronic records show that the late filing penalty of £100 for 2010/2011 was issued on 14 February 2012.

Those records also show that for 2011/2012 the late filing penalty of £100 was issued on 12 February 2013, the daily penalty of £900 was issued on 14 August 2013 as, too, was the six-month late filing penalty of £300. The 12 month late filing penalty of £300 was issued on 25 February 2014.

For the tax year 2012/2013, the late filing penalty of £100 was issued on 18 February 2014, the daily penalty of £900 was issued on 18 August 2014, and the six-month late filing penalty of £300 was issued on the same date.

For 2014/2015, the late filing penalty of £100 was issued on 17 February 2016, the daily penalty of £900 was issued on 12 August 2016, as was the £300 six-month late filing penalty.

HMRC’s self-assessment notes for the appellant which record contacts between HMRC, the appellant and/or the appellant’s agent record that on 20 May 2013 (in relation to a daily penalty for 2011/2012) the appellant was told that his tax return for that year had still not been received and he was incurring £10 per day of daily penalties. The note records that the taxpayer would contact the agent as soon as possible.

Those notes further record that on 5 June 2013, there was a further telephone conversation between the appellant and HMRC who had a query about “his” time to pay agreement. It also records that daily penalties were discussed and that the appellant would speak to his agent.

The notes further record that on 23 August 2013 there was a further conversation between HMRC and the appellant regarding late filing penalties. He was advised that the tax return for 2011/2012 was still outstanding and so penalties were due and payable. The appellant told HMRC that Mr Smith was responsible for filing his returns. HMRC advised the appellant to contact his accountant as soon as possible regarding the penalties and interest.

The notes further record that on 1 August 2014 there was a telephone conversation between HMRC and the appellant’s agent who said that he would file the 2011/2012 and 2012/2013 returns as soon as possible and was having online difficulties.

In a letter dated 10 March 2022, HMRC notified the appellant of the penalties and the fact that he was accruing interest as a result of late payments. A late appeal was made against those penalties by Mr Ross. HMRC did not accept the late appeal, but permission to bring the late appeal was given by Judge Rankin in his decision issued on 1 August 2024 (“Judge Rankin’s decision”).

In his notice of appeal, the appellant asserted that: the charges seem to relate to years where no tax liability arose and thus no tax was lost to HMRC; Mr Smith had been ill for several years and had passed away; Mr Smith would have appealed against any penalties on a timely basis; the first time the appellant received any indication of the outstanding liabilities was on 10 March 2022.