Penalties for late filed self-assessment return and late paid tax

The taxpayer filed his 2010-11 tax return late and on paper in April 2013 – the deadline was 31 October 2011. He paid the tax due in May 2013 although he should have paid it by 31 January 2012. He also paid the tax due for 2011-12 in May 2013 although it was due by 31 January 2013.

In August 2012 HMRC issued a £300 penalty under FA 2009 Sch 55 para 5 on the basis his 2010-11 return was more than six months late. It later issued a further £300 penalty under para 6 because the return was more than 12 months late. After receiving the return HMRC recalculated the penalties to reflect the tax due and also imposed late payment surcharges for 2010-11 and 2011-12.

The First-tier Tribunal allowed the taxpayer’s appeal so HMRC appealed on the grounds that the First-tier Tribunal erred...