HMRC – Late Filing Penalty

HMRC charges a late filing penalty when a paper return arrives late. But its case for charging a late filing penalty was dealt a big blow when the First Tier Tribunal upheld the taxpayer’s appeal against a late filing penalty. The case pertains to late filing of a CIS return by a company called Heronslea Limited decided by the First Tier Tribunal on 03 February 2011 (Heronslea V HMRC – TC00978). HMRC demanded a penalty of £ 100 contending that the return was due on 19 June and it did not arrive until 22 June. The company contended that the return was posted in ‘good time’ by first class mail. An ‘education letter’ sent out by HMRC stated that posting the return by first class mail was ‘insufficient’ to guarantee delivery and that the taxpayer should obtain proof of posting. In this case the taxpayer did not provide any tangible proof of posting. So the Tribunal weighed up various other evidences available to determine the case including the taxpayer’s history of filing the returns. The Tribunal noted that “proof of posting is not a legislative (sic) procedure”. Clearly, where such proof is provided, it is conclusive; in its absence, the Tribunal must, as here, weigh up the evidence provided. But obtaining proof of posting is not a legal obligation and HMRC cannot insist upon it”. It takes judicial notice of the fact that first class post normally arrives, if not the next day, at least by the day after that. A letter posted first class on 14 June could thus be expected to arrive on or before 16 June – in good time for the deadline of 19 June. In determining the case Tribunal applied Section 7 of the Interpretation Act 1978 which states that the deemed delivery date applies “unless the contrary is proved.” Heronslea’s return is thus deemed to be delivered in the normal course of post unless HMRC can rebut that presumption”