Tax penalties, escalators and carried dogs

Duncan Hansard (2019 UKUT 0391) was over 12 months late submitting his tax returns for 2010/11 and 2011/12 and received flat rate penalties of £300 plus tax geared penalties under FA 2009 Sch 55. He appealed to the first tier tribunal (FTT) which threw out some of the penalties and upheld others. HMRC appealed against some of the FTT’s decisions.

Penalty structure

Where a tax return is not submitted within six months of the due filing date, a penalty is due under FA 2009 Sch 55 para 5, while paragraph 6 requires a further penalty if the return has still not been submitted after 12 months. In both cases the penalty is the greater of:

(a) 5% of any liability to tax which would have been shown in the return in question, and

(b) £300.