Schedule 36 daily penalties cut where advisers blamed, UT rules

Pension scheme administrators who ignore Schedule 36 information notices get a lower second tranche of daily penalties where they were relying on advisers, even though that reliance was not a reasonable excuse.Nationalarchives In Hill v HMRC the Upper Tribunal (Tax and Chancery Chamber)Nationalarchives set aside the First-tier Tribunal's quantumNationalarchives and remade it at £30 a day for the first trancheNationalarchives, £30 a day for the secondNationalarchives and £60 a day for the thirdNationalarchives.

David Hill and David McCracken, acting as pension scheme administratorsNationalarchives, received information notices seeking 13 itemsNationalarchives and complied with none of themNationalarchives. Fixed £300 penalties issued about two months before daily penalties began had warned that continued failure could bring penalties of up to £60 a dayNationalarchives. Daily penalties followed in three tranches: £30 a day after about three months of non-compliance, £60 a day after about seven and a half months, and £60 a day after about 13 monthsNationalarchives. There had been no partial compliance at the time of the second or third tranches. A related firm of advisers had known of HMRC's enquiries for a significant time.

In its decision in principle of 7 August 2026Nationalarchives the Tribunal dismissed the appeal on the approach to reasonable reliance on an adviser and on the challenge to the First-tier Tribunal's findingsNationalarchives, but held the First-tier Tribunal had erred on quantum by reasoning with reference to paragraph 49A of Schedule 36 to the Finance Act 2008, which did not apply on these factsNationalarchives. Both sides agreed the Upper Tribunal should remake the quantum decision rather than remit it, and the Tribunal agreed, admitting the appellants' late written submissions where HMRC did not object in the interests of efficiency.

HMRC argued the amounts should stand: non-compliance by administrators was serious and hampered its functions, the appellants ignored direct communications over an unacceptably long period despite explicit warning, and the maximum rate was warranted for persistent total non-compliance. The purpose of daily penalties is to encourage compliance with the notice rather than to punish indefinitelyNationalarchives. The appellants argued £10 a day would suffice: they had relied on advisers, 13 outstanding requests did not mean 13 deliberate breaches, the mere passage of time did not prove the maximum was needed, there was no finding of deliberate obstruction, and they did eventually comply.

The Tribunal gave considerable weight to the First-tier Tribunal having heard all the evidence, but held the second tranche should fall to £30 a day to recognise the appellants' reliance on their advisersNationalarchives. The first and second tranches are therefore £30 a day and the third is £60 a dayNationalarchives: by the time of the third tranche the appellants ought to have realised they needed to reassess the advice they were being givenNationalarchives. HMRC must recalculate the penalties on that basisNationalarchives and serve the calculation within 21 days of the release of the decisionNationalarchives, with the parties to agree the figure or apply to the Tribunal to settle itNationalarchives. The time for any costs application runs from the release of this quantum decisionNationalarchives.

The penalties are Part 7 of Schedule 36 to the Finance Act 2008GOV, applied in Hill v HMRC [2026] UKUT 438 (TCC) with the encouragement purpose stated in Cotswold Financial Planning v HMRC [2021] UKFTT 198.