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Telegraph
23-05-2025
- Telegraph
Taxpayer wins £1.7k over ‘scam' HMRC fine
A taxpayer has won a £1,700 appeal after late penalty emails from HM Revenue & Customs (HMRC) were sent to her junk mail. Denise Howarth was issued a £100 penalty after she completed her 2020-2021 self-assessment, but failed to click the final button to submit the return. Ms Howarth did not realise she had incurred a penalty until March 2023, by which time subsequent late payment charges and interest had raised the amount she owed to £1,770.67. She immediately filed the tax return and submitted an appeal. At a First Tier Tribunal, HMRC argued that emails about the penalty were sent to Mrs Howarth. But they went to her junk mail and were deleted. The Tribunal found that this was a reasonable excuse, as the emails could have been mistaken for a scam or phishing exercise. Ms Howarth had a record of submitting her tax returns on time dating back to 2004, with the exception of the 2019-2020 tax year when HMRC's computer records showed that she filed a day late. The Tribunal found that Ms Howarth had in fact filed on time. On the same day that Ms Howarth filed her 2019-20 return, she chose to be contacted by HMRC electronically through email alerts. These messages notify taxpayers when there is an update on their account, but do not indicate the level of urgency. Howarth had no recollection of signing up for electronic alerts. There was evidence that she had deleted at least three of these emails which had been sent to her junk folder as she believed they were phishing scams. Ms Howarth also filled out her 2020-2021 tax return on the day of the deadline, but did not complete the process or receive a confirmation code. However, she took a screenshot of what she believed to be the final page of the submission process. 'Unconscionable for HMRC to pursue penalties' Judge Keith Gordon said: 'In some way, the appellant was the author of her own misfortune in two key respects. She had signed up to receive electronic communications from HMRC and, on at least three occasions, deleted genuine emails from HMRC which should have alerted her to check her personal tax account. 'On the other hand, the appellant clearly strove to comply with her tax obligations over a number of years. There is nothing wrong with a taxpayer – particularly one with relatively simple affairs – routinely leaving the task of submitting a tax return to the evening of the deadline, or the previous day.' The Tribunal also found that the appellant had good reason to believe that the 'bland' e-mail messages being sent by HMRC were 'spam and/or phishing exercises', and that it was reasonable for her to promptly delete them. John Hood, tax partner with accountancy firm Moore Kingston Smith and a former HMRC inspector, said the case highlighted the problems with automatic penalties charged by HMRC for late filing. He added: 'While the penalties system is properly intended to fine people who do not comply and submit their return on time, there will always be situations where people who have acted correctly are caught out. 'Frankly, it seems unconscionable for HMRC to pursue penalties from someone who did take every effort to submit their return on time but fell short due to IT issues beyond her control.' An HMRC spokesman said: 'We are disappointed with the decision, which was based on the specific facts of the case, and we are currently considering our next steps.'
Telegraph
18-05-2025
- Business
- Telegraph
Family photos could help second home owners swerve tax raid
Second home owners could avoid double council tax bills on a property if there are family photos and heirlooms on display, a Scottish ruling suggests. Court documents published last week indicate the presence of sentimental items can help families to prove a property is their main residence and not a second home. It comes after more than 200 authorities in England brought in a 100pc council tax premium on second home owners from April 1. Authorities in Wales and Scotland have held similar powers since 2017 and 2024 respectively. The recent ruling from the Upper Tribunal for Scotland centres around 'Mr A' who owns a home in the Shetland Islands but works in Saudi Arabia for most of the year, according to Scottish Legal News. Mr A launched an appeal against the council raising the tax bill on his Shetlands property to £2,048. Mr A and his wife argued the house on the archipelago was their main residence, despite the fact their children attend school abroad. They also claimed it was their intention to move back to the Shetlands property permanently in the future. The case was first rejected by Scotland's First-tier Tribunal (FTS) chamber in October, but a further appeal to the Upper Tribunal has proved successful, and it will again be heard by the FTS at a later date. Family photographs and heirlooms were not stated as a defence, however, Judge Sheriff McCartney suggested in the ruling that such an argument could add weight to future claims. She said: 'The question of whether a property is a main or sole residence is fact sensitive. 'It requires the decision maker to have a clear understanding of the relevant facts.' She continued to state several factors were influential in the case, including: how much time the family spent at the property; their ties to each home including where they book dentists' and doctors appointments; the whereabouts of personal belongings such as photographs, heirlooms and 'items of sentimental value'; their living arrangements abroad; and details of Mr A's work contract. Ben Menahem, of law firm Seddons GSC, said: ' Second home owners may well begin to rely on this reasoning to challenge higher council tax premiums, arguing that the presence of such items reflects the property's use as a main residence.' Johnny Drysdale, a property lawyer at Keystone Law, said it is 'interesting to note the judge's broadening of the criteria of what is a main residence'. He added: 'Scottish judgements are not binding on English courts but commentary from judges across the border can be persuasive and influential. 'If these types of quite tenuous ties to a property can be included in the assessment, then we are going to see this tax challenged by people in England and Wales for the same reasons. 'Photographs and items of sentimental value seem very broad and open to interpretation.' Shetland Islands Council enforced the penalty on its 221 second homes last April in an effort to boost availability for locals. It is one of many local authorities across Britain to launch a tax raid on second home owners. Those in England have seen their annual bills rocket to £3,672 on average, according to Telegraph analysis. Andrew Hazeldine, of law firm Aaron & Partners, said the Scottish ruling mentioning presence of family photographs in a second home 'could potentially open up a loophole of sorts'. But he warned that 'simply putting some items of sentimental value or photographs into an unoccupied property is unlikely to sway the court's decision significantly'. Aaron Peake, of credit score service CredAbility, said: 'A couple of framed photos and a few keepsakes aren't going to outweigh hard evidence. 'This ruling doesn't open the door for a flood of people dodging council tax by putting up a few family snaps. In fact, I'd caution anyone thinking about it.'
