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Penalties reduced for victim of investment scam

The FTT found it difficult to understand why HMRC had not accepted the taxpayer’s grounds of appeal. She had never visited the UK and was the victim of a property-based investment scam.

19th Feb 2021
Tax Writer
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Carp park lot

In January 2015, Malaysian resident Fei Ling agreed to purchase a car park lot at Glasgow airport for £20,000 from Park First Group. She received advice from the seller’s agents that she would not be liable for UK income tax, as the rental receipts would be below the personal allowance.

The purchase completed in May 2015 and the taxpayer first received income from the scheme in 2015/16. The Park First scheme, which was described as a scam, was eventually withdrawn after an investigation by the FCA in 2019.

2014/15 penalties issued in error

In February 2015 the taxpayer (in the mistaken belief that her purchase of the parking lot had taken place in January 2015, and that no UK tax was payable) submitted form NRL1 for the year 2015/16 to HMRC. Form NRL1 allows a non-resident individual landlord to apply to receive UK rental income gross, without the deduction of UK tax.

Following receipt of form NRL1, HMRC created a self-assessment record for Fei Ling and issued a notice to file for 2014/15 (despite the taxpayer having received no income during that year). 

HMRC then proceeded to issue erroneous penalties in respect of the late filing of the 2014/15 return. In February 2016 HMRC issued a late filing penalty of £100, while in September 2016 HMRC issued daily penalties totalling £900 and a six-month late filing penalty of £300.

In November 2016, all the 2014/15 late filing penalties were cancelled, without explanation from HMRC.

Confused next steps

In July 2016, prompted by the penalties, Fei Ling wrote to HMRC, stating she was not familiar with UK taxation but had been advised that no UK tax was payable. She asked HMRC to confirm by email that this was correct.

HMRC responded in October 2016 by letter, advising her that all her UK income was taxable, as a person who is not a European Union national, she was not entitled to an annual personal allowance. 

HMRC advised her that a 2015/16 notice to file had been sent to her and that the deadlines for submitting this return were 31 October 2016 for a non-electronic return or 31 January 2017 for an electronic return. 

The letter also made reference to the 2014/15 notice to file and penalties, which had at that point not been cancelled.

Further penalties

In February 2017, HMRC issued a £100 penalty for the late filing of Fei Ling’s 2015/16 return, under FA 2009, Schedule 55.

A few weeks later, Fei Ling sent in a residence, remittance self-assessment page (SA109 2016) and asked for the penalty to be waived, believing it to be a mistake.

HMRC replied to advise the taxpayer that she had only completed part of the form and that she needed to complete the main self-assessment tax return (SA100). The letter also advised that the deadline for submitting the 2015/16 return had passed, and if she wished to appeal the penalty she should do so after she had filed the return.

HMRC received Fei Ling’s paper 2015/16 return on 13 April 2017. HMRC issued total penalties for 2015/16 of £820, comprising a £100 initial late filing penalty, and £720 in daily penalties. Fei Ling appealed to the FTT (TC07942).


The FTT commented that it was clear Fei Ling was trying to comply with her UK tax obligations but was confused as to what was required. Further, and when taking into account the time delay for post to reach the UK and Malaysia, it was also clear the taxpayer was taking her obligations seriously and responding to HMRC's correspondence relatively quickly.

The FTT found it unsurprising that the taxpayer was confused and uncertain of her UK tax filing obligations, and cited the following actions of HMRC:

  • The issue and subsequent cancellation of the erroneous 2014/15 penalties. 

  • No adequate explanation as to why the 2014/15 penalties arose or were cancelled.

  • October 2016 letter which referred to the 2014/15 penalties. 

This was all coupled with the incorrect advice given to Fei Ling by the seller’s agent regarding her tax status.

The FTT found that the facts that gave rise to Fei Ling’s failure to file her 2015/16 return amounted to an objectively reasonable excuse, which she remedied without unreasonable delay. The appeal was allowed and the late filing penalties cancelled.


While the FTT did not intend to criticise HMRC, the tribunal did find it difficult to understand why the taxpayer’s grounds of appeal were not accepted. Attention was also drawn to HMRC’s tax charter as it stood at the time, which stated:

“We want to give you a service that is fair, accurate and based on mutual trust and respect. We also want to make it as easy as we can for you to get things right […] We’ll help you understand what you have to do and when you have to do it.”

The HMRC charter has since been updated, with the new version published on 5 November 2020.

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