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No reasonable excuse for agent’s blunders

The first tier tribunal has upheld late filing penalties issued to John Pettitt [TC07451] which stemmed from his tax agent’s failure to correctly register as a new agent.

17th Jan 2020
Tax Writer
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Sand running through the shape of hourglass

HMRC issued Pettitt with a notice to file his 2016/17 self-assessment tax return on 6 April 2017. This return was eventually filed electronically on 31 August 2018, seven months after the filing deadline.

Late-filing penalties applied

Penalties for filing a self-assessment tax return late increase the longer a return remains unfiled.

HMRC initially issued Pettitt with a total of £1,300 in penalties in February and August 2018:

  • A £100 initial late filing penalty (FA 2009, Sch 55 para 3)
  • £900 in daily penalties (£10 per day under FA 2009, Sch 55 para 4)
  • A £300 penalty as the return had still not been filed 6 months after the penalty date (FA 2009, Sch 55 para 5)

FA 2009, Sch 55, para 5 permits a penalty to be imposed at the higher of £300 or 5% of any liability to tax which would have been shown in the return, in cases where the return remains unfiled six months after the filing deadline.

Thus, once Pettitt’s return was filed, HMRC increased the total six-month late filing penalty to £943, this being 5% of the tax liability shown on his return (£18,858.74). This resulted in total late filing penalties of £1,935.

Appeal submitted

An appeal against the late filing penalties was made on the basis that HMRC had denied Pettitt’s new accountants, Jerrett Singh Partnership (JSP), access to file Pettitt’s tax return.

At the time, JSP was in the process of buying out the taxpayer’s old agent, Gemjade, who was also blocked by HMRC from filing anything on behalf of the taxpayer.

Reason for delay

On 10 October 2017 JSP attempted to register as the authorised agent to act for Pettitt, but this was not done correctly and it only caused the old agent to be removed as Pettitt’s tax agent. It appears that JPS had not applied for an agent’s code or reference number before submitting the 64-8 authorisation form in October 2017. Instead, JSP attempted to register as Pettitt’s authorised agent using the old agent’s code.

This led to a situation where the taxpayer had two agents, neither of whom had the power to file his tax returns. This resulted in substantial delays in filing the return.

JPS did not ask for a new agent’s code until 24 October 2018.

Avoidable situation

HMRC highlighted that this delay in filing could have been avoided if JSP had taken the simpler route of registering as filing agents, which would have allowed JSP to file the taxpayer’s return in time.

HMRC also argued that the taxpayer, who was ultimately responsible for filing his tax return, did not check what the agents were doing to make sure the tax return filing was done and so did not have a reasonable excuse.

No reasonable excuse

Judge Dr Kameel Khan stated that the taxpayer’s reliance on a third party did not amount to a reasonable excuse for the late filing of the return.

The FTT found that not only was it the responsibility of the taxpayer to ensure that their return is completed and delivered on time, but the taxpayer should also take reasonable care that the agent complies with the taxpayer’s instructions to file their return on time, including making regular checks on progress.

As a result, the appeal was dismissed and the late filing penalties of £1,935 were upheld.


JSP made a series of missteps which led to the tax return being filed seven months late, which could conceivably have been filed on time had they registered as filing agents, or correctly registered as a tax agent.

However, the buck stops with the taxpayer, and this case reiterates that reliance on a third party, subject to limited exceptions (eg the Angela Salazar case), does not amount to a reasonable excuse.

Replies (6)

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By SteveHa
17th Jan 2020 13:55

I'm a bit bemused. In the case of JSP it looks as though they weren't registered as agents with HMRC at all (and so no agent login etc.) but what was stopping the old agent filing the Return. There's no requirement to be authorised for SA, so easy peasy (or, indeed, any old agent could have submitted for the price of a few beers).

Thanks (0)
By ireallyshouldknowthisbut
17th Jan 2020 15:03

Sounds like incompetence in the new firm, and a failed attempt to trying to shift the blame to HMRC.

Thanks (1)
Replying to ireallyshouldknowthisbut:
By dgilmour51
20th Jan 2020 10:47

Agreed - looks like a 'start-up' over-reaching themselves.
That said, it is doubtless the case that 'guidance' from HMRC was couched in abstruse terms.
Furthermore, in recognition of the opaque nature of the potage of tax regulations, one of HMRC's indicators that taxpayers are taking reasonable steps to conform thereto is that they take 'expert advice' (recognition, imho, that standard rational Joe Public cannot possibly engage advantageously with HMRC) .
This is what [I expect] the taxpayer thought he was doing.
To then turn round and imply that the taxpayer should be gainsaying his hired 'expert' seems to me to be capricious at best.

Thanks (3)
By Mr J Andrews
21st Jan 2020 10:17

No doubt a reduced fee for this service ?
And what's the expression about paying peanuts ................

Thanks (0)
21st Jan 2020 12:20

I would think the taxpayer has a clear case to sue the agent for negligence now . The agent clearly doesn't know what they are doing as you can file a return electronically without registering an agency if you have all of the client's details and their approval to do so. I see no need for people to attack HMRC on this one ... it was late and I think the judge made the correct call . I do however think the late filing penalties are way over the top and need reviewing . Maybe to a maximum of the tax due plus the initial £100 fine so that those who do not owe any tax anyway - probably because of low income - do not get hammered with up to £1,900 in fines they cannot afford to pay .

Thanks (1)
Replying to KenKLM:
By dgilmour51
23rd Jan 2020 11:05

Sue the agent ... indeed.
You make the point that folk exist on low margins ["... probably because of low income..."].
Legal cost for prep and submission will easily exceed £5k.
The reality is that out of the situations where someone deserves to be sued only a miniscule proportion can actually happen - and even then it is in the natute of the UK legal system that the complainant has an extra hurdle as the system prefers 'an out of court settlement' which, of course, in the eyes of the complainant is settlement and not justice.

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