Free ATED Penalty Appeal Letter Template

ATED Penalty Appeal — Annual Tax on Enveloped Dwellings

Appeal Under Finance Act 2013 + Finance Act 2009 Schedule 55 / 56  ·  20 May 2026

Dear Sir or Madam,

I write on behalf of Wessex Property Holdings Limited (Company No. 12345678) to appeal against the fixed £100 late filing penalty under the Schedule 55 regime issued by HMRC on 10 May 2026 (penalty reference ATED-PEN-2026-4471-091). The penalty relates to the Annual Tax on Enveloped Dwellings (ATED) return for the chargeable period 1 April 2026 to 31 March 2027 in respect of 14 Cadogan Mews, London SW1W 8DT. This appeal is lodged within the 30-day period prescribed for ATED penalty appeals (the prescribed appeal deadline is 9 June 2026). I rely on the reasonable excuse defence under the Schedule 55 regime as applied to ATED returns. The factual basis of the reasonable excuse is set out below.

Company name: Wessex Property Holdings Limited
Companies House number: 12345678
ATED reference: ATED/2026/00788423
Registered office: 5 Berkeley Square, London W1J 6BR
Authorised signatory: James Lawrence Bertram (Director)
Telephone: 020 7946 0114
Email: j.bertram@wessexproperty.co.uk

Address of the dwelling: 14 Cadogan Mews, London SW1W 8DT
Relevant valuation date: 1 April 2022
Market value at the valuation date: £3,250,000
ATED band relied on by HMRC: more than £2 million up to £5 million — 2026/27 annual charge £32,200
Chargeable period: 1 April 2026 to 31 March 2027
Annual charge in the notice: £32,200
Relief claimed (if any): Property rental business relief claimed in full — let throughout the period to an unconnected third party on commercial terms
Statutory framework: Finance Act 2013 Part 3 (sections 94-159) and Schedule 33

Type of penalty: fixed £100 late filing penalty under the Schedule 55 regime
Date of the penalty notice: 10 May 2026
Penalty notice reference: ATED-PEN-2026-4471-091
Amount of penalty: £100
Statutory framework: Finance Act 2009 Schedules 55 and 56 as applied to ATED by Finance Act 2013 Schedule 33
Appeal deadline: 9 June 2026 (30 days from the date of the penalty notice)

The company disagrees with the £100 late filing penalty issued in respect of the 2026/27 ATED Relief Declaration Return for 14 Cadogan Mews, London SW1W 8DT. The dwelling has been let throughout the chargeable period to an unconnected third party on arm's-length terms and qualifies for property rental business relief — the underlying ATED charge for the period is nil. The Relief Declaration Return was prepared by the company's regulated tax adviser within time but, owing to an internal handover failure within the firm, was not submitted to HMRC until 5 May 2026. The company instructed alternative advisers as soon as the failure was discovered and the RDR was lodged on the same day.

The Upper Tribunal in Perrin v HMRC [2018] UKUT 0156 (TCC) settled the four-stage objective test that HMRC and the First-tier Tribunal must apply when considering the reasonable excuse defence. The Upper Tribunal in Hannover Leasing v HMRC [2024] UKUT 244 (TCC) confirmed that the test applies in the ATED context with appropriate adjustment for the corporate-taxpayer reality, recognising that genuine uncertainty as to dwelling definition or relief eligibility can support the defence:

Stage 1 — Facts asserted: establish the facts the corporate taxpayer asserts give rise to a reasonable excuse.
Stage 2 — Objective assessment: consider whether, viewed objectively, those facts amount to a reasonable excuse for the default.
Stage 3 — Excuse ceased: identify the date on which any reasonable excuse ceased.
Stage 4 — Remedy without unreasonable delay: decide whether the corporate taxpayer remedied the failure without unreasonable delay after that time.

Category of excuse relied on: failure of a regulated adviser (accountant, tax adviser or company secretary) on whom the corporate taxpayer reasonably relied.

Stage 1 — Facts asserted:
The company is a UK-resident property investment vehicle holding a single high-value London dwelling, 14 Cadogan Mews, London SW1W 8DT, which has been let throughout the company's ownership to an unconnected commercial tenant on arm's-length terms. Property rental business relief applies in full and the underlying ATED charge for the 2026/27 chargeable period is nil. The company's regulated tax adviser, Pemberton Crawford Tax Limited (a member firm of the Chartered Institute of Taxation), was instructed in writing on 4 March 2026 to prepare and submit the Relief Declaration Return for the 2026/27 chargeable period. The retainer expressly named the ATED filing as falling within the scope of the engagement. On 1 May 2026 the company received the HMRC penalty notice and immediately enquired of Pemberton Crawford Tax Limited as to the status of the return. It then emerged that the partner with conduct of the file had left the firm on 21 April 2026 and the return had not been transferred to a colleague before that partner's departure. The company instructed Hartwell Burgess LLP the same day and the Relief Declaration Return was lodged with HMRC on 5 May 2026.

Stage 3 — Date on which the reasonable excuse ceased: 1 May 2026.

Stage 4 — Remedy without unreasonable delay:
After the failure was discovered on 1 May 2026, the company instructed Hartwell Burgess LLP the same day, transferred the underlying paperwork the following morning, and the Relief Declaration Return was lodged on 5 May 2026. The elapsed time between the excuse ceasing and the failure being remedied was four days, which is reasonable in light of the need to instruct fresh advisers and transfer the paperwork. The objective Perrin test is satisfied — a reasonable corporate taxpayer in the company's position could not have remedied the failure any faster.

The Annual Tax on Enveloped Dwellings is subject to a wide range of statutory reliefs covering let property, property development trades, employee or partner accommodation, farmhouses, dwellings opened to the public, charitable use, regulated home reversion schemes and registered social housing. Where a dwelling qualifies for one or more reliefs the chargeable amount is reduced to nil for the relevant days. However, the filing obligation is not removed by the relief — a Relief Declaration Return (RDR) is required under section 159A of the Finance Act 2013. A late RDR can attract a late filing penalty even though no charge is due. The principal mitigation argument here is that the underlying ATED charge was nil because the dwelling qualified for relief throughout the chargeable period.

Relief category relied on: property rental business — let to unconnected third parties on commercial terms.

Factual basis of the relief:
The dwelling at 14 Cadogan Mews has been let throughout the 2026/27 chargeable period to an unconnected third-party tenant on arm's-length commercial terms (a 12-month assured shorthold tenancy at a market rent of £6,200 per month, granted on 15 March 2026). The tenancy agreement is enclosed. The tenant is not connected with the company or with any of its directors. Property rental business relief under sections 133-135 of the Finance Act 2013 applies in respect of every day of the chargeable period and the underlying chargeable amount is nil.

Relief Declaration Return submitted on: 5 May 2026.

The First-tier Tribunal in Reeves v HMRC [2019] UKFTT 0273 (TC) accepted that proportionality is a live consideration on an ATED penalty appeal: a penalty disproportionate to the nature and extent of the default is appropriate for reduction under the special-circumstances power in the Schedule 55 framework. The Upper Tribunal in HMRC v Hok Ltd [2012] UKUT 363 (TCC) confirmed that the First-tier Tribunal has no general fairness jurisdiction, but the special-circumstances power and the reasonable excuse defence operate as the statutory routes through which proportionality is given effect.

Proportionality and special circumstances relied on:
The penalty under appeal is £100 in circumstances where the underlying ATED charge for the chargeable period is nil because the dwelling qualifies for relief in full. The dwelling has been let on arm's-length terms for the entirety of the company's ownership and the company has filed Relief Declaration Returns in time for every previous chargeable period since acquisition. The default is attributable to a partner departure at the company's regulated adviser and was remedied within four days. The First-tier Tribunal in Reeves v HMRC accepted that proportionality bears materially on the special-circumstances analysis where the underlying liability is nil.

First-time defaulter: the corporate taxpayer has no prior ATED compliance failures. The Upper Tribunal has consistently treated a clean prior record as relevant to proportionality.

If HMRC declines this appeal the corporate taxpayer relies on the right to request an HMRC internal review of the decision. The view-of-the-matter letter triggers a fresh 30-day window in which to escalate to the First-tier Tribunal (Tax Chamber) by way of form T240. The Tribunal has jurisdiction to determine the appeal de novo. Where HMRC declines internal review or where the review conclusion remains adverse, form T240 will be lodged with the First-tier Tribunal (Tax Chamber) at PO Box 16972, Birmingham B16 6TZ.

If HMRC declines this appeal, the company will request an internal review of the decision within 30 days. If the review conclusion remains adverse, form T240 will be lodged with the First-tier Tribunal (Tax Chamber) at PO Box 16972, Birmingham B16 6TZ within the further 30-day window from the view-of-the-matter letter.

Wessex Property Holdings Limited respectfully asks HMRC to cancel the fixed £100 late filing penalty under the Schedule 55 regime of £100 for the chargeable period 1 April 2026 to 31 March 2027 in respect of the dwelling at 14 Cadogan Mews, London SW1W 8DT. The reasonable excuse defence , the relief re-check, the banding-dispute argument (where relied on), the proportionality / special-circumstances power and the review-route arguments set out above are relied on individually and cumulatively. Please acknowledge receipt of this appeal and notify the company of the outcome in writing as soon as possible.

YOURS FAITHFULLY,