Appealing against HMRC penalty

Appealing against HMRC penalty

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I have only just submitted a P11D and P11D(b) for 2005/06 for a "one man" company as, when preparing the client's accounts, I realised that his current account had become considerably overdrawn giving rise to a benefit in kind of £2424. The client sent a cheque off for the Class 1A of £310 straight away but has now received a penalty notice for £310 (the notice says that this has been reduced from the statutory penalty of £500).

There has been no loss of tax as it will be collected under self assessment on 31 January and there has only been a small loss to the Revenue being the interest on the £310.

Is there any way that I can appeal the penalty on the basis that it is disproportionate to the tax lost?
Tony Robbins

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By andymeeson
06th Dec 2006 12:04

Not really likely
The argument that "the penalty is disproportionate" runs up against the fact that it nonetheless represents the clear will of Parliament. No court is going to overturn a statutory penalty on that basis. The fact that it has already once been mitigated by the Crown reinforces this.

HMRC no doubt feel that they have been generous in their mitigation, by having reduced the full statutory penaly to the level of the NIC paid late (this is a purely concessionary practice which aligns the P11Db/Class 1A penalty with the self assessment penalties). They would argue that the reduced penalty represents a commonly accepted measure of proportionality for such penalties. My view is that the courts would agree.

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