Goldsmith v HMRC: Can HMRC Make You File A Return It Doesn't Need?

HMRC already knew exactly what you owed. The figure came straight off your payslips and a P800 reconciliation. Then a letter landed demanding a full tax return, and when you filed it a little late, a £100 penalty followed.

So you are thinking what almost everyone in your position thinks: surely it was pointless—and unfair—to make you file a return for tax HMRC had already worked out, and then fine you for being late with it. If the return told HMRC nothing it didn't know, how can the notice that demanded it have been valid?

It is a powerful instinct, and you are not the first to have it. A genuinely sympathetic low earner—underpaid only because of an HMRC coding error—took exactly that argument all the way to the Upper Tribunal. He won at the first hearing and lost on the appeal. That case is Goldsmith, and the most useful thing it does is clear one dead argument out of your way so you can spend your appeal on the ones that actually work.

The Story Of Mr Goldsmith

Mr Goldsmith was an employee. His income tax was collected through PAYE—the system where your employer deducts tax from your wages before you are paid—and on top of his wages he received Employment and Support Allowance (ESA), which is taxable.

The trouble was not anything he did. For 2011-12 and 2012-13, the PAYE deductions did not collect his full tax bill, because both payers—his employer and the ESA payer—gave him the full tax-free personal allowance. That meant the tax due on his ESA went uncollected. It was a coding error baked into the system, not a mistake of his.

Each year HMRC sent him a P800. A P800 is an end-of-year PAYE reconciliation showing whether you have under- or overpaid—it is not a formal tax assessment. His P800s showed underpayments of £624.60 for 2011-12 and £289.90 for 2012-13. For the first year he agreed to pay the shortfall off in 33 instalments. He made three payments, then stopped.

Here was HMRC's problem. A P800 is not an enforceable debt, so HMRC could not easily chase the unpaid balance. Its solution was to issue notices under section 8 of the Taxes Management Act 1970 requiring him to file self-assessment tax returns—because a self-assessment, once made, is a debt HMRC can enforce under section 59B TMA. He filed both returns late, and a £100 fixed late-filing penalty was charged for each year. He appealed.

The case reached the Upper Tribunal as HMRC v Goldsmith [2019] UKUT 0325 (TCC), decided by Mr Justice Fancourt and Judge Guy Brannan and released on 4 November 2019. One detail is worth holding onto: Mr Goldsmith took no part in the Upper Tribunal appeal. He was unrepresented, and the tribunal had to appoint barristers as "Advocates to the Upper Tribunal" just to put the arguments he might have made. That is the same lonely position around 45% of tribunal appellants are in.

The Argument That Felt Obvious

Mr Goldsmith's argument was the one you are probably forming right now. Section 8 lets HMRC require a return "for the purpose of establishing the amounts in which a person is chargeable" to tax. If HMRC already knew those amounts from PAYE and the P800, the argument runs, there was nothing left to "establish"—so the notice fell outside the statutory purpose and was invalid. No valid notice, no valid penalty.

The First-tier Tribunal—the first rung of the tax tribunal system—agreed with him. Judge Richard Thomas, in the First-tier Tribunal decision below, read "establishing" to mean "calculating." HMRC had already calculated the tax through PAYE, so on that reading the notices were not for the statutory purpose at all. He allowed the appeal and cancelled both penalties.

If the story stopped there, this would be a very different article. It did not stop there. HMRC appealed to the Upper Tribunal, not on the facts but on the meaning of that one word—"establishing."

Why The Upper Tribunal Disagreed

The Upper Tribunal held that "establishing" means more than "calculating." To establish a liability is to secure it, fix it, make it final and enforceable—not merely to work out the figure.

The reasoning turns on what a self-assessment return actually does. It does two jobs. First, it calculates your tax. Second—and this is the part the "HMRC already knew" argument misses—it turns that tax into a debt HMRC can legally enforce, under section 9 and section 59B TMA. A P800 cannot do that second job. A self-assessment can. So even when HMRC knows the figure to the penny, a return still changes something real: it converts a known-but-uncollectable amount into an enforceable debt.

The Upper Tribunal adopted the reasoning of Judge Mosedale in a separate First-tier case, Crawford, which had reached the same conclusion. Building on that, the tribunal stated its own conclusion at paragraph 119:

"We respectfully agree with Judge Mosedale's analysis. Therefore, we conclude that, even though HMRC knew the amount of tax due from Mr Goldsmith's employment income and ESA and they served a notice to file in order to create a debt due from Mr Goldsmith pursuant to section 59B TMA, HMRC served a valid notice to file for the requisite statutory purpose of establishing the amounts in which Mr Goldsmith was chargeable to income tax for the relevant years of assessment."

The disposal followed at paragraph 138: HMRC's appeal was allowed, the notices to file were valid, and the fixed penalties were therefore due. The "HMRC didn't need my return" argument failed—not because the facts were unsympathetic, but because the law treats a return as doing something a P800 never could.

You Can Still Make The Argument—You Just Will Not Win On It

There is an important subtlety here, and it is the reason Goldsmith is not the end of the road for arguing about your notice.

HMRC had also argued that the First-tier Tribunal had no business asking about the purpose of the notice at all. The Upper Tribunal rejected that. At paragraph 113 it held that the First-tier Tribunal did have jurisdiction to consider why a notice to file was given. In other words, you are allowed to put the validity of the notice in issue. The tribunal can hear the argument. Mr Goldsmith simply lost it on the merits.

That makes Goldsmith a different kind of loss from Hok, the case about why "it's not fair" is not a ground of appeal. In Hok, the problem was the forum: the First-tier Tribunal had no legal power to consider the fairness argument, so it belonged in a different building entirely. In Goldsmith, the forum was right—the tribunal could hear the validity challenge—but the argument was wrong on the law. One is "wrong room"; the other is "right room, losing argument." Knowing which is which saves you from wasting your one appeal.

What Goldsmith Does Not Touch—The Arguments That Still Work

Here is the turn, and it is the part to read closely. Goldsmith closes exactly one door: "the notice was pointless because HMRC already knew the figure." It leaves the other doors wide open. None of these arguments depends on HMRC needing your return—so none of them is affected by Goldsmith.

The Notice Was Never Validly Served On You

Goldsmith assumes a notice to file that was properly given. It says nothing about a notice that never validly reached you. If HMRC cannot show that a valid notice was sent to your correct address, the foundation of the penalty is missing.

This matters because penalties are sometimes charged on the strength of a notice issued to an old address, or to a tax account you no longer use, or where HMRC cannot actually prove the notice went out at all. HMRC has to prove the basics before any penalty stands. Our guide to self-assessment penalties walks through the "was the notice to file validly issued?" question in detail.

You Had A Reasonable Excuse

A late-filing penalty under Schedule 55 to the Finance Act 2009 does not stand if you had a reasonable excuse for filing late (paragraph 23 of Schedule 55). Goldsmith did not disturb this defence at all—Mr Goldsmith simply did not pursue a reasonable-excuse argument on appeal (paragraph 68), so the case decided nothing about it.

This is the surviving merits route for many readers. The leading authority is Perrin v HMRC [2018] UKUT 156 (TCC), which set out a four-step test the tribunal applies: what facts do you say give you an excuse, which of those are proven, were they objectively reasonable for someone in your position, and did you put the failure right without unreasonable delay once the excuse ended. We unpack each step in our analysis of Perrin and the four-step test, with worked examples in our reasonable excuse guide.

Special Circumstances—Including HMRC's Own Error

Schedule 55 also lets HMRC reduce a penalty where there are "special circumstances" (paragraph 16). This is HMRC's power, but the tribunal can step in where HMRC's decision on special circumstances was legally flawed.

This is where the substance of Mr Goldsmith's grievance still has life. The First-tier Tribunal in his case found that, had the notices been valid, it would have reduced the penalties to nil as special circumstances—precisely because the underpayment arose from HMRC's own coding error, not from anything he did. So "this whole mess was HMRC's fault" can bite as a special-circumstances point even though it cannot make the notice invalid.

One technical caveat the Upper Tribunal flagged at paragraph 135: special reduction operates on an appeal against the amount of a penalty, not an appeal against liability for it. That distinction is what defeated the special-circumstances fallback in Goldsmith itself, where the appeal was framed as one against liability. The mechanics of special reduction and the "flawed" standard are owned by our guide to reducing HMRC penalties.

The Daily-Penalty Notices Have Their Own Requirements

Goldsmith was only ever about the fixed £100 penalties. At the hearing HMRC dropped its appeal on the daily penalties—the £10-a-day charges that can run up to £900 once a return is more than three months late. So Goldsmith is no authority at all on whether daily penalties were validly charged.

Daily penalties carry their own conditions. HMRC must decide that a daily penalty is payable and give you proper notice specifying the date from which it runs. The leading case on those requirements is Donaldson v HMRC [2016] EWCA Civ 761 in the Court of Appeal. If you are facing daily penalties, the validity of the daily-penalty notice is a separate question from the validity of the fixed £100—and a separate place to look for a defence.

You Should Not Have Been In Self-Assessment At All

There is a difference between a notice to file that is valid but burdensome, and one that should never have been issued because you do not meet the self-assessment criteria. Goldsmith was correctly brought into self-assessment by a valid notice; this route is for people who were not.

If you genuinely should not be in self-assessment, HMRC can withdraw the notice to file under section 8B TMA, and Schedule 55 then allows the related penalties to be cancelled. This is the proper mechanism where your real complaint is "I should not have been required to file in the first place"—not "HMRC didn't need the figures." Our self-assessment penalties guide explains how the withdrawal route works in practice.

How To Use This If You Have A Penalty

The single lesson of Goldsmith is this: do not stake your appeal on "HMRC already knew what I owed." That argument has been tested by a sympathetic appellant and it lost. Pick a live ground instead.

First, check what you are actually facing. Your penalty notice may be the fixed £100, daily penalties of £10 a day building up to £900 once a return is more than three months late, or further penalties at six and twelve months—and they can stack on top of one another. The surviving arguments below can apply to any of them.

Run through the questions the case leaves open. Was the notice to file actually, validly served on you? Do you have a reasonable excuse for filing late—and can you evidence it? Did your situation involve an HMRC error or other special circumstances? If daily penalties were charged, were the daily-penalty notices valid? And should you even have been in self-assessment, so that the notice could be withdrawn under section 8B?

Frame your appeal around whichever of those fits your facts, not around the dead argument. Our guides to writing grounds of appeal and self-assessment penalties help you turn the right question into a proper ground. One framing point is worth knowing: special circumstances—such as an HMRC error—can only reduce a penalty on an appeal against its amount, not on an appeal made only against your liability for it. That distinction is what defeated the fallback argument in Goldsmith itself.

And mind the clock. You generally have 30 days from the date of HMRC's penalty notice to appeal. The first appeal goes to HMRC, not the tribunal—usually on form SA370 or through HMRC's online appeal tool. If HMRC turns you down, you can ask for a statutory review (a fresh look by a different officer, which takes about 45 days and costs nothing), and only if that fails does the case go to the First-tier Tribunal, where there is no fee. Our guides to how to appeal to the tax tribunal and the HMRC internal review walk through each step.

If the 30 days has already passed, the door is not necessarily shut—a late appeal can be accepted where you have a good reason for the delay, as our guide to late appeals explains. The sooner you ask, the better your prospects.

Keep one more thing straight: the penalty and the tax behind it are separate. Even a successful penalty appeal does not wipe out the underlying tax you owe—in Mr Goldsmith's case, the £624.60 and £289.90 themselves—and interest runs on unpaid tax at 7.75% until it is paid, though HMRC can usually agree a Time to Pay instalment plan. The fixed £100 penalty is a civil matter, not a criminal one, and unlike the tax it does not itself attract interest while you appeal it.

Key Legislation And Resources

The Judgment

• HMRC v Goldsmith [2019] UKUT 0325 (TCC) — Upper Tribunal (Tax and Chancery Chamber), Mr Justice Fancourt and Judge Guy Brannan, released 4 November 2019 (GOV.UK decision page)
• Full judgment PDF — the complete Crown-copyright text on GOV.UK
• Goldsmith in the First-tier Tribunal (Judge Richard Thomas) — the original decision, which allowed Mr Goldsmith's appeal and cancelled the penalties, and which the Upper Tribunal then overturned

Legislation

• Section 8, Taxes Management Act 1970 — the power to require a return "for the purpose of establishing the amounts in which a person is chargeable"; s.8(1D) sets the 31 October (paper) and 31 January (online) deadlines, and s.8(1G) gives a 3-month window where the notice is issued late
• Section 9, Taxes Management Act 1970 — a return includes a self-assessment of the tax
• Section 59B, Taxes Management Act 1970 — self-assessed tax becomes a due and enforceable debt (the linchpin of "establishing")
• Section 8B, Taxes Management Act 1970 — HMRC's power to withdraw a notice to file
• Schedule 55, Finance Act 2009 — the late-filing penalty regime: para 3 (£100 fixed), para 4 (£10/day up to £900), para 5 (6-month penalty), para 6 (12-month penalty), para 16 (special reduction), para 17A (cancellation on withdrawal of the notice), para 23 (reasonable excuse)

Key Cases

• HMRC v Goldsmith [2019] UKUT 0325 (TCC) — a s.8 notice is valid even where HMRC already knows the tax from PAYE, because "establishing" includes making the liability an enforceable debt (paras 119, 138); the FTT does have jurisdiction to test the notice's validity (para 113)
• Crawford v HMRC [2018] UKFTT 0392 (TC) — Judge Mosedale's First-tier reasoning that "establishing" means more than "calculating," expressly adopted by the Upper Tribunal in Goldsmith (paras 112 and 119)
• Donaldson v HMRC [2016] EWCA Civ 761 — the Court of Appeal authority on the conditions for valid daily penalties under Schedule 55 para 4
• Perrin v HMRC [2018] UKUT 156 (TCC) — the four-step reasonable-excuse test, undisturbed by Goldsmith
• HMRC v Rogers and Shaw [2019] UKUT 0406 (TCC) — decided shortly after Goldsmith and expressly agreeing with it on the FTT's jurisdiction; it held that a s.8 notice issued by computer, without a named "flesh and blood" officer, is valid. Goldsmith remains good law, with no higher-court reversal

GOV.UK Guidance

• Self Assessment tax returns: penalties — the £100 fixed penalty, daily penalties, and the 6- and 12-month tiers
• Appeal a Self Assessment penalty for late filing or late payment — the online tool and form SA370
• Self Assessment manual — HMRC's guidance on withdrawing a notice to file under section 8B and cancelling the related penalties

On This Site

• Self-Assessment Penalties — the £100-on-£0-tax problem, the "was the notice validly issued?" question, and the s.8B withdrawal route
• Perrin v HMRC: Reasonable Excuse — the four-step test, the surviving merits route
• What Is A Reasonable Excuse? — plain-English primer on the defence
• Hok v HMRC: Tribunal Jurisdiction — the companion "limits of an argument" case: wrong forum, not wrong on the merits
• Reducing HMRC Penalties — special circumstances, special reduction, and the "flawed" standard
• Writing Grounds Of Appeal — turning a live question into a ground the tribunal can hear
• How To Appeal To The Tax Tribunal — the step-by-step of appealing to HMRC, asking for a review, and lodging a tribunal appeal
• HMRC Internal Review — the free statutory-review stage that comes before any tribunal
• Late Appeal To The Tax Tribunal — what to do if the appeal deadline has already passed
• HMRC Penalties Explained — penalty types and the limited grounds to challenge them
• Understanding HMRC Appeal Rights — is there an appealable decision, and what can the tribunal do with it?

This article is for informational purposes only and does not constitute legal or tax advice. For advice specific to your situation, consult a qualified tax adviser, accountant, or solicitor.