In Chartridge Developments Ltd v HMRC [2016] TC05493 the First Tier Tribunal (FTT) cancelled penalties for late submission of ATED Returns. HMRC's penalty notices were defective.
- Chartridge owned five properties subject to Annual Tax on Enveloped Dwellings (ATED).
- The company failed to submit ATED Returns for the periods ended 31 March 2014 and 2015 until 7 August 2015.
- HMRC assessed penalties for late submission of Returns.
- Chartridge appealed on the grounds that the penalty notices were defective; four out of the five showed the wrong filing due dates.
HMRC argued that s114 TMA 1970: Want of form or errors not to invalidate assessment, could be used to correct the error. This section is intended to make sure that an assessment is not invalid just because it contains a mistake, as long as it still conforms to the relevant Taxes Act in substance and effect.
The FTT found that:
- The mistakes in the notice were due to HMRC’s misunderstanding of ATED legislation.
- The error affected the calculation of all dates for the various penalties.
- This was a gross error likely to mislead the taxpayer and could not be cured by s114.
The appeal was allowed and four penalties cancelled.
Chartridge’s appeal against the fifth penalty on grounds of reasonable excuse for late submission was dismissed.
Links and further reading
Annual Tax on Enveloped Dwellings (ATED)
Penalties: Annual Tax on Enveloped Dwellings (ATED)
Case reference: Chartridge Developments Ltd v HMRC [2016] UKFTT TC05493
TMA 1970 s114 case: Michael Mabbutt v HMRC [2016] UKFTT TC05075
