fbpx

HMRC Aren't Always Right

9th November 2017 By Arman Khosravi

According to the Government’s GOV.UK website, if you are a company director, you have to file a tax return every year. It says that every UK company director must send in a personal self-assessment tax return annually, and that this must be done even without prompting from HM Revenue and Customs (HMRC).

HMRC took that as authority to levy £1,300 in penalties on a company director who failed to file his tax return for the year 2014-2015 until it was several months overdue. He was not a native English speaker and had received no tax return to fill in nor, until a late stage, any correspondence or reminders from HMRC that filing a return was necessary – for the simple reason that HMRC do not send them.

The man appealed against the penalties and the case came before the First-tier Tribunal (FTT). HMRC ran into a significant problem when the FTT ruled that their claim that ‘as a company director one of the appellant’s responsibilities is to register for self-assessment and send a personal self-assessment tax return each year without prompt or reminder from HMRC’ was wrong as it was not backed up by any legislative requirement to do so.

HMRC had eventually sent a notice that a tax return was expected. However, the taxpayer had moved during the relevant period and claimed that he had not received it.

The FTT accordingly cancelled the penalties.

The case is particularly interesting for two reasons. Firstly, HMRC went all the way to the FTT on the basis that guidance on a government website had legal effect, which was clearly not the case in this instance. Secondly, the man asked at the hearing if he could give evidence himself via a translator. The strict procedure in such cases is that HMRC must be informed in advance so that they can bring an independent translator of their own. Notification was not given and HMRC refused to accede to his request, which seems unduly harsh.

The impression one gets is that HMRC are willing to use every trick in the book to collect what seems to be a minor penalty. One might surmise that the motivation for pursuing this case was that if they had won, they could have used the ruling to justify taking similar actions in the future.

A word of caution…the FTT ruling states explicitly that ‘if a person receives a notice to file a return he is under an obligation to file a return by the due date’. However, just because HMRC take a view on your tax matters does not mean they are right, nor does it mean that they will not seek advantage in the interpretation of the rules.

Source: Concious

Latest News

Tenants Can Purchase Freehold When Landlord Cannot Be Found

11th June, 2024 By

The Leasehold Reform, Housing and Urban Development Act 1993 gives qualifying leaseholders the right to join together to buy the freehold of their properties – a process known as collective enfranchisement. A recent case demonstrated that this right can be exercised even when the landlord cannot be found. The leaseholders of two flats in a terraced house wished to purchase it from the landlord, but were unable to ascertain his whereabouts and therefore could not serve notice on him under Section 13 of the Act. They therefore applied for an...

Court Refuses to Set Aside Divorce Order Applied for by Mistake

6th June, 2024 By

While the courts have a range of powers to set aside orders, they will only exercise them in limited circumstances. In a somewhat surprising case that has attracted much comment, the High Court declined to set aside a final order of divorce that had been applied for by mistake. A couple separated in January 2023, after more than 21 years of marriage. In October that year, while financial remedy proceedings were still ongoing, the wife's legal representatives inadvertently applied for a final order of divorce in respect of her instead...

Waiting Time for Grants of Probate Falls

3rd June, 2024 By

Following concerns last year about delays in processing probate applications, recent figures from HM Courts and Tribunals Service show that waiting times for grants of probate are continuing to improve. The average time from submission of a probate application to probate being granted fell to 11.3 weeks in March 2024, a decrease from 13.7 weeks in February and 13.8 weeks in January. This is the lowest figure since March 2023, when the average was 10.8 weeks. The longest waiting time since then was in November, at 15.8 weeks: that month,...

Late Appeal Against Tax Penalties Rejected

31st May, 2024 By

It is incumbent on taxpayers to make sure they fully comply with their obligations to file returns and pay any tax due. The point was illustrated by a recent case in which a taxpayer whose return had not been received by HM Revenue and Customs (HMRC) failed to persuade the First-tier Tribunal (FTT) that he should be permitted to appeal against the resulting penalties. On the evening of 31 January 2014, the man had completed his 2012/13 Income Tax return on HMRC's website. Shortly afterwards he went to Cyprus, and...