I know we cannot hide behind the old agent and the client is unlikely to sue them for compensation.
The matter is before the Commissioners in early December. I will not claim 'reasonable excuse' for the non-submission of the Return, just that the amount is unreasonable.
Question 1.
Do the Commissioners have the power to vary the penalty if they agree that HMRC have acted unreasonably? The Clerk is very able (a solicitor) and I fear he will tell me going in that I cannot argue this.
Question 2.
Can anyone quote from similar experiences or name precedents to support me?
My grounds for saying that the penalty is unreasonable
In every other field I know of (CT, Self Assessment etc), HMRC send out regular statements of account. If you fail to file a Return by the first deadline, you get a penalty notice. So when you get the second penalty, you ought to know what you are in for. Besides, the first penalty will have triggered a series of statements of account.
By contrast, for Employers' PAYE they regularly save things until NINE penalties have fallen due - a "nice little earner" I have called it. If there are nine penalties, there should be nine Notices. If there is one notice, there should only be one penalty.
Most interesting is to examine why this is. I believe it is simply technical failings in their systems. We know that there are still 12 PAYE computers which we are told is why we cannot see statements of account online as we do with the other taxes. But that should not prevent Employers from being sent Statements of Account as a matter of course. I consistently find advising Employers about their liabilities the most difficult - like "seeing through a glass darkly".
And then there is the reason for the 9 months' delay. For the three years I have been involved with online P35s, that is about how long we have had to wait for things to process, due to the monstrous cock-ups with a system that makes us file by late May but cannot process without human intervention the other end.
Your comments please - I will tell you how we get on before the Commissioners. I think there is trouble ahead with CIS so this may be a useful topic for debate.
David Ross
Replies (8)
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I would agree with the earlier comments
and I also agree that the system is totally biased. As regards advice, I would say that the best chance may be to contact HMRC directly and appeal to their better nature.
You could always threaten to get the papers involved, and the way things are at the moment, they are unlikely to want further adverse publicity. Good luck and update us in due course.
CIS penalty
I think you would be better going down the reasonable excuse route.
Bysermaw Properties Limited failed to submit its CIS return and claimed the penalty was 'grossly disproportionate’ : -
http://www.financeandtaxtribunals.gov.uk/judgmentfiles/j3595/Spc00644.doc
The company lost.
A Mrs A M Rowland successfully appealed against a penalty for the late payment of her SA tax on the basis that she relied on advice from her accountant : -
http://www.bailii.org/uk/cases/UKSC/2006/SPC00548.html
Then argue that the reasonable excuse existed throughout the period of default because of the problems with the PAYE system - had HMRC told the company earlier it would have done something about it.
Tax Payers Charter
I have a similar situation with a P35 supposedly not received online and a penalty issued after 5 months of £500.
I intend to argue that these notices are computer generated, therefore HMRC must have chosen to delay the issuing of the notice and the only reason for this can be to increase penalties. This combined with the fact that there was a nil liability (thus the penalty is excessive) breaches HMRC's obligation to treat the taxpayer fairly.
At the moment HMRC are refusing to list this case for the Commissioners as they feel it would be unsuccessful. Thus we are having to file a complaint to remind them that the taxpayer has the right of appeal irrespective of their opinion.
Will have to wait and see what happens but the comments below don't appear to give too much hope. I am beginning to wonder if there is any point in having commissioners if they appear to act as HMRC's advocate.
CIS
The Revenue will argue that it is not their duty to issue reminders but it is the taxpayers duty to file their returns on time.
Listing of appeals
This is not down to HMRC - Robert - have you tried writing direct to the Clerk to request a listing?
Congratulations
My one comes up for a Commissioners hearing soon, only £500 but the pricipal is the same. Your experience has given me fresh hope.