Another tax case of interest has been decided recently in the First Tier Tribunal of appeals in favour of the taxpayer.

This concerned an appeal against a £400 penalty for failing to deliver a PAYE end of year return.  In this case, the company accepted that a penalty was due but complained that HMRC had waited four months to issue a penalty notice and as the penalty was £100 a month, they were hit with a £400 penalty rather than a £100 penalty which would have immediately alerted them that they were late.  The judge agreed with the taxpayer.  Even though HMRC are not legally obliged to issue an immediate penalty, he concluded that HMRC had been “unfair and falling very far below the standard of fair dealing…expected”.  The judge reduced the penalty to £100.

The judge in this case is Geraint Jones QC who also recently found in favour of the taxpayers in a number of cases which depended on whether there was a ‘reasonable excuse’ for the late filing of returns.  HMRC have always stated that a ‘reasonable excuse’ must be something exceptional and wholly unexpected.  Mr Jones disagreed, pointing out that if parliament required the excuse to be ‘exceptional’, that is what they would have written when passing legislation.  In his view, if the average person would decide the excuse was ‘reasonable’, that was good enough.

Now, these Tribunal decisions are not binding but it seems to me that any taxpayer in a similar situation ought to be optimistic of a similar outcome if they appeal against what increasingly look like unfair penalies.  So if you’re in that situation, talk to your Barnes Roffe partner for advice.