In Mohammed Muhsen Yaqoobi v HMRC [2024] TC09388, the First Tier Tribunal (FTT) found that living abroad, postal delays and limited internet access were not reasonable excuses for the late submission of a Self Assessment return.    

Late filing penalty 2

Mr Yaqoobi failed to submit a 2020-21 Self Assessment return on time, as he thought that he was under no legal obligation to do so since he lived abroad and had no tax liability for the year.

  • He had submitted Self Assessment returns for the previous two tax years whilst he was still a UK resident.
  • He eventually filed his 2020-21 tax return 375 days late resulting in HMRC charging Late filing penalties totalling £1,600. 
  • HMRC refused late appeals against the penalties, stating no excuse had been given. 
  • The penalties subsequently were upheld on Statutory review.
  • The taxpayer appealed to the First Tier Tribunal (FTT).

He claimed he had a Reasonable excuse for late submission:

  • He was unreachable due to lack of internet which had resulted in him being unable to open letters emailed to him advising of the Penalites charged
  • The internet issues meant he could not submit a return.
  • Covid restrictions were in place meaning he could not enter the UK.
  • There were postal delays outside his control.

The FTT found that there was a legal obligation for Mr Yaqoobi to submit a return:

  • S.8 of the Taxes Management Act 1970 states a return must be submitted if a notice to complete a return is issued by HMRC.
  • HMRC had issued a notice to his last known address and since the notice was not returned to HMRC, the notice was deemed served.

The FTT found that the penalties were issued: 

  • In line with Schedule 55.
  • To the taxpayer's last known address, and therefore properly served.

The FTT considered the grounds of Reasonable excuse and found:

  • No evidence was submitted regarding the purported postal delays and no arrangements had been made to forward on mail.
  • The taxpayer had made no enquiries into his requirement to file. Being ignorant of the law is not a reasonable excuse, particularly when previous years' returns had been filed and HMRC had not been made aware of any changes in circumstances.
    • It was not reasonable for him to assume, without carrying out any research or making any enquiries, that he would not need to declare his UK rental income in a tax return, simply because he was no longer resident in the UK and his UK rental income was below his personal allowance. 
  • The other ‘excuses’ could have been managed and avoided allowing him to be more diligent in organising his tax affairs.

The appeal was dismissed.   

Useful guides on this topic

Notice to file a tax return: section 8(1) TMA 1970
A guide to explain the implications of a notice sent to an individual under s.8(1) TMA 1970 to file a tax return.

Penalites: Self assessment (SA) late filing, payment, notification & error
Self Assessment (SA) tax penalties: what penalties are due for outstanding tax returns? What penalties are due for late payment? Are there special rules for delays affecting victims of the Post Office Horizon scandal and due to Covid-19?

Late filing a SA return
Under the new SA late filing regime, a late filing penalty applies regardless of whether you have a liability or made a payment.

Grounds for appeal: reasonable excuse
What is considered to be a 'reasonable excuse' when a taxpayer makes an appeal against a tax compliance failure?

How to appeal a tax penalty
What are the steps in making an appeal? What should your appeal cover? What does recent case law say on this topic?

Statutory review (by HMRC) 
What is a Statutory Review? When does HMRC offer a Statutory Review? Is it automatic? What happens in a Statutory Review? Can you challenge a Statutory Review's findings? Can you influence a Statutory Review? When does HMRC offer a Statutory Review?

External link

Mohammed Muhsen Yaqoobi v HMRC [2024] TC09388

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