Tribunal Dismisses Appeal Against Late Filing Penalties: Key Takeaways and Recommendations
In a recent decision by the First-tier Tribunal Tax Chamber, Mr. Mohammed Muhsen Yaqoobi’s appeal against late filing penalties for his 2020/21 self-assessment tax return (SATR) was dismissed. The case highlights the importance of understanding and adhering to tax obligations, even when living abroad. Here, we summarize the case and provide recommendations for taxpayers to avoid similar issues.
Case Summary
Background: Mr. Yaqoobi was penalized £1,600 for filing his 2020/21 SATR (Self-Assessment tax return) 375 days late. The penalties included:
- An initial late filing penalty of £100.
- Daily penalties totaling £900.
- Additional penalties of £300 each for six and twelve months late filing.
Appellant’s Arguments: Mr. Yaqoobi argued that he was not required to file the SATR because he did not receive a notice from HMRC due to living abroad. He also claimed reasonable excuses for the late filing, including:
- Lack of internet access abroad.
- COVID-19 travel restrictions.
- Postal delays.
Tribunal’s Findings: The Tribunal found that HMRC had properly served the notice to Mr. Yaqoobi’s last known address in London. The Tribunal did not accept Mr. Yaqoobi’s excuses, stating that he should have made arrangements to manage his tax affairs while abroad. The Tribunal concluded that ignorance of the law and failure to make necessary arrangements did not constitute reasonable excuses.
Decision: The Tribunal dismissed the appeal, upholding the £1,600 penalties. The decision emphasized the importance of taxpayers managing their obligations, even when living abroad.
Recommendations for Taxpayers
- Stay Informed:
- Ensure you are aware of your tax obligations, especially if you have income from the UK while living abroad. Regularly check HMRC’s website for updates and guidance.
- Maintain Communication:
- Keep HMRC informed of any changes in your circumstances, such as moving abroad. Provide a reliable correspondence address and consider using email notifications if available.
- Plan Ahead:
- Make arrangements to manage your tax affairs before leaving the UK. This could include appointing a tax agent or setting up mail forwarding services.
- Utilize Online Resources:
- Take advantage of online filing systems and resources. Ensure you have access to the internet and necessary tools to file your returns on time.
- Seek Professional Advice:
- If you are unsure about your tax obligations, seek advice from a tax professional. They can help you understand your responsibilities and avoid penalties.
- Document Everything:
- Keep records of all communications with HMRC, including notices received and any correspondence sent. This can be crucial if you need to appeal a decision.
By following these recommendations, taxpayers can better manage their tax obligations and avoid the pitfalls that led to Mr. Yaqoobi’s penalties. Staying proactive and informed is key to ensuring compliance and avoiding unnecessary penalties.
