A cautionary tale – no excuse for late return

In a recent case heard by the First Tier Tribunal (FTT), a taxpayer lived overseas, encountered postal delays and had limited internet access, but these did not constitute reasonable excuses for the late submission of a self-assessment tax return.

The case
When he was a UK resident, the taxpayer had previously submitted tax returns on time. However, for 2020/21, he was living overseas and presumed there was no need to submit a return because there was no tax liability for that year. The income for his UK property was covered by his personal allowance.

HMRC thought otherwise. The taxpayer was charged late filing penalties totalling £1,600 as a result of his self-assessment tax return being submitted more than a year late.

The penalties of £1,600 included an initial £100 penalty, £10 daily penalties charged for 90 days, and two £300 penalties for being six months and then twelve months late.

Reasonable excuse
At the FTT hearing, the taxpayer argued that:

• A lack of internet access meant he could neither submit a tax return, nor open letters emailed to him with details of the penalties charged; and
• There were postal delays outside his control.

 
Ignorance of the law is, of course, no excuse in these matters. The FTT considered that the taxpayer should have been more diligent in organising his tax affairs. For example, arrangements could have been made to forward mail from the UK.
 
A warning
This case shows how important it is to keep on top of your tax affairs, even if no tax is at stake.
 
The £1,600 of penalties were only for a late tax return. The situation will be much worse if tax is also paid late; with both penalties and interest charged. Late payment interest is currently 7.25%, but the government is adding an extra levy of 1.5% from 6 April 2025.
 
HMRC’s online calculator, which can be used to obtain an estimate of the penalties and interest charged for a late self-assessment tax return and/or payment, can be found here.