As part of its strategy to make tax digital, HMRC has been encouraging taxpayers to switch to paperless communication via their online personal tax account.

As a result if you consent to paperless filing HMRC will post notices on your online account and send you an email notifying you about the new message. To read the notice (message) you need to login to your HMRC personal tax account. Even if you have a tax agent/accountant do not assume they have been copied in to the message by HMRC as this is not always the case (just as your accountant doesn't have access to your personal tax account).

In a recent case, a self-employed taxpayer took up a full time job as an employee of a large company and understood from a conversation with HMRC’s helpline that he would not need to file a tax return for 2016-17, so he assumed an email message he received on 6 April 2017 was spam, and deleted it. Subsequent HMRC reminders got the same treatment until he received a letter from HMRC informing him that he owed penalties totalling £1,300 for his late 2016-17 tax return.

Was notice given?

In his defence the taxpayer’s argument was based on the principle that posting a notice within HMRC’s computer system and alerting him about it electronically did not meet the definition of notice being “given” in section 8 of the Taxes Management Act 1970

Unfortunately, the judge didn’t buy this argument and reminded him of the terms and conditions to which he agreed by ticking the consent to paperless communication box in his personal tax account which state: “When statutory notices, decisions, estimates and reminders relating to your tax affairs and tax credits are issued to you using your secure online mailbox, a notification email will also be sent to your registered email address to inform you of this.”

The taxpayer told the tribunal that he had read the addresses and first line of the HMRC emails on his smartphone. Having received a number of phishing emails purporting to be from HMRC in the past, he deleted them.

Given the T&Cs he had agreed to, and the content of HMRC’s emails which specifically stated that, unlike most spam emails, “For security reasons, we have not included a link with this email,” the tribunal turned down his reasonable excuse appeal.

What’s expected of a reasonable taxpayer

A reasonable taxpayer who consented to paperless communication would expect to receive some communication from HMRC, the judge decided, and would read more than the first lines of an email from the department on their phone rather than deleting it.

Having viewed the email, the taxpayer would check their online account.

“Even if he was unsure about the spam/not spam status of the email, the reasonable person would know he could safely check his online account using the access codes previously provided,” the tribunal decided.

“We find that [taxpayer] did not act reasonably in deleting the email which alerted him to the Notice to File without reading it. As a result, we find that he does not have a reasonable excuse for failing to file his return by the due date.”