In a recent tribunal case, a taxpayer, Amber Awan, found herself battling almost £1,000 in late filing penalties imposed by HMRC.
Despite owing no tax for the 2021/22 fiscal year, Awan’s oversight in filing her self-assessment tax return on time led to substantial penalties, highlighting the strict digital communication expectations set by HMRC.
Background on the Case
Amber Awan, who has been registered for self-assessment due to rental income, missed the filing deadline for her 2021/22 tax return by 177 days.
Although her income from property exceeded £2,500, her total income was below the personal allowance threshold, meaning no tax was due. However, penalties accrued swiftly, initially reaching £100 and then climbing by £10 each day for 88 days, resulting in a final amount of £980.
The First-tier Tribunal heard that Awan’s delay stemmed from a combination of factors: personal demands as a new teaching assistant, managing a family, and confusion based on prior HMRC guidance, which had sometimes waived her filing requirements when her income was below the threshold.
Additionally, Awan and her representative, Dr. Shakil Awan, argued that the penalty system disproportionately punished her for a filing oversight that had no tax impact.
The Tribunal’s Decision
The tribunal, presided over by Judge Susan Turner, ultimately ruled against Awan, asserting that the penalties were “fair and proportionate” under Schedule 55 of the Finance Act 2009.
Judge Turner emphasised that, since Awan had voluntarily opted for electronic communications with HMRC, it was her responsibility to regularly check her online tax account. Although notifications were sent to her verified email address, Awan had missed the initial alert, leading to accumulating penalties.
HMRC’s representative, Nicola Shardlow, pointed out that Awan could have contacted HMRC to confirm her filing requirements, as her tax history included years when she was excused from filing due to low income. Shardlow further argued that daily penalties were not intended to be punitive but rather to encourage timely compliance with tax filing obligations, regardless of the taxpayer’s liability.
Public Reaction and Implications
This case has stirred public debate, especially among individuals required to file tax returns but who often struggle with digital communications or lack regular access to their online accounts.
Critics argue that HMRC’s reliance on online-only notices disproportionately impacts taxpayers like Awan, who may not frequently check their online portals.
Looking Forward: HMRC’s Digital Approach
The tribunal’s decision underscores the importance of taxpayers staying vigilant with online communications, particularly as HMRC pushes toward a “digital by default” model. While this approach streamlines processes, cases like Awan’s highlight potential issues, especially when penalties accrue despite no tax being owed.
Awan has the right to appeal the decision if she wishes to take her case further, but her experience serves as a cautionary tale to all self-assessment filers to check their digital tax accounts frequently—or risk costly penalties.
Conclusion
Amber Awan’s case highlights the sometimes harsh consequences of missing a tax filing deadline. The ruling serves as a reminder of HMRC’s strict digital protocols and the importance of regular monitoring of electronic tax accounts.
For taxpayers juggling multiple responsibilities, this case raises important questions about the balance between fair enforcement and proportional penalties in a rapidly digital tax system.