Online return not delivered on time but reasonable excuse existed

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The taxpayer was held not to have filed her online tax return on time, but her belief that the return had been filed successfully was considered to be a reasonable excuse for the failure, and her appeal against late filing penalties was allowed.

The appellant thought that she had filed her tax return for 2012/13 online on 31 January 2014, but HM Revenue and Customs (HMRC) subsequently issued a penalty (under FA 2009, Sch 55) for failing to file the tax return by the due date (31 January 2014). 

The appellant wrote to HMRC saying that she had filed her return on 31 January at 18.16. However, HMRC replied stating that its records showed no return as having been received, and that this may be because the appellant did not complete the final stage of the online process. The return was successfully filed online in October 2014. The appellant appealed against the late filing penalty notices issued by HMRC.

The First-tier Tribunal (FTT) found on the balance of probabilities that the appellant submitted her return online on 31 January 2014, but that a fault in the chain of online transmission resulted in the electronic data not reaching HMRC’s computer. However, the FTT considered that the appellant had not proved that the return was recorded on HMRC’s computer system, and so held that she failed to deliver her return before the penalty date.

The FTT then considered whether the appellant had a reasonable excuse for failing to deliver the return on time. Whilst finding the matter finely balanced, the FTT held that she submitted the return, and considered she was entitled to believe that this was enough. The FTT also accepted that when she was informed by HMRC that a possible glitch in the system had led to her return not being captured, she resubmitted the return within a reasonable time from being told.

On balance, the FTT held that the appellant had a reasonable excuse for her failure to file on time, and that she remedied the failure without unreasonable delay. HMRC’s decision to assess a penalty was cancelled, and the appellant’s appeal was upheld.

Hauser v Revenue & Customs [2015] UKFTT 682 (TC) 

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