Tier One Tribunal

Tier One Tribunal

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Hi Everyone,

I hope you're having a good weekend.

I've recently brought on a client who is a builder and he hasn't filed a tax return for the last 7 years despite being required to do so, HMRC are claiming that he owes them over £9k in penalties and interest.

I've written to HMRC explaining that as my client was on a CIS deduction scheme of 20% and he worked solely for contractors and not the public everything he would have earnt would have been taxed and it is very likely that after factoring in other expenses and his personal allowances he would have been due a large rebate at the end of each year.

After following up on the letter and speaking to them they say that the the only way forward is if we produce the last 7 years worth of accounts and file the outstanding returns.

My client clearly cannot afford to repay the £9k+ as he is a builder with a family to feed and I can't image that any court would award a settlement to HMRC that would cause undue hardship to his family. Producing 7 years worth of accounts and tax returns isnt an option either because of the costs involved. My client is happy to drop his claim to any rebates if HMRC will leave him alone and he can get a fresh start going forward.

I understand that many of you may ask why I have taken on this client in the first place and that is because I believe that he is being aggressively victimised by our tax authorities for commiting no crime other than to work in order to feed and house his family, he just isnt capable of understanding the tax system without the help of an accountant.

My approach to this will be to write to HMRC stating our intent to take this to tribunal if they don't drop the penalties and if that doesnt work then file the application for the tribunal process and have the case heard, my client is in agreement.

I would be grateful if anyone could advise on a better course of action and what they believe the chances are of success in this scenario if we do take this to a tier 1 tribunal?

Replies (12)

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By User deleted
19th Apr 2015 15:33

Best course of action
Prepare the outstanding returns. The large rebate due for each year will go some way to mitigating the costs. Chance of success at Tribunal? I'd say less than 30%.

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Accountants Northampton
By Shamrock
19th Apr 2015 15:48

I spoke to the officer at HMRC
She said there is no notice of liability in this case and agreed that it's very unlikely tax would have been due. This demand from HMRC is purely penalties and interest on those penalties.

Portia I don't believe you have enough knowledge of my abilities to be able to question them, while I will consider any advice including whether I need to hand this over to a specialist I would prefer if you could keep this constructive.

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By ShirleyM
19th Apr 2015 16:29

Little chance of success

It may be that I am not as brave as you (or foolish, as the result may prove), but going to tribunal with no facts or figures to back up your argument seems pretty risky, to me.

It is unlikely you will charge your client a worthwhile fee for such a risky venture, so if you are feeling altruistic, why don't you give him a hefty discount for preparation of accounts/tax and that way you will be going to tribunal on a surer footing. Indeed, if you take this route then a tribunal may not be needed in the first place.

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Accountants Northampton
By Shamrock
19th Apr 2015 16:37

Thanks for the advice
Yes I'm beginning to see that going to a Tribunal without the tax returns up to date isn't going to be productive.

As you mentioned BKD its likely that the rebates due will cancel out the penalties and we could avoid it altogether.

Will work on that basis.

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By King_Maker
19th Apr 2015 17:25

Persuasive evidence would need to be produced to the Tribunal to stand any chance of success.

Will not any tax refund pay for the relevant fees?

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By User deleted
19th Apr 2015 17:33

Interest?
Penalties don't carry interest so something doesn't add up

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By User deleted
19th Apr 2015 17:38

OP sounds as if he wishes to make a 'complaint' to the tribunal rather than an appeal which is made against the decision of HMRC within the time limit! I would agree with BKD that the OP should prepare the tax computation for all these years and show that there is no 'potential lost revenue', and then try to argue the case with HMRC from thereon. 

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Accountants Northampton
By Shamrock
19th Apr 2015 17:55

Slip of the tongue
Sorry I'm just used to saying penalties and interest together at the same time but that doesn't apply here.

Yes I agree with you about the submission of the previous returns and producing the evidence, I think I was a bit too ready to take it to Tribunal before but thats why I posted on here to get a second opinion so thank you very much for all of your help.

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By refs8
19th Apr 2015 23:13

Tribunal

Shamrock ignore the no alls on here that think they can knock a fellow professional we have all been on the receiving end of them.

HMRC will not budge on the tax returns. I have done a lot of these cases of over the last few years and a tribunal will not help you either.

Work out quickly what the likely tax position could be. Has the client considered bankrupcy?

Most times HMRC will only process the returns and you will have no come back. 

PM if you want a chat in private

Good luck

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Accountants Northampton
By Shamrock
20th Apr 2015 10:31

Thankyou refs8

Thanks for the kind words, I'm a Chartered Management Accountant with 8 years of experience, I got tired of the corporate life and have been running my own business for just over a year now.

I'll admit that I don't know everything but I have worked hard to do as much tax research as possible so that my 26 clients so far don't miss out on any tax planning opportunities.

I've brought on a few clients who were unhappy with their previous accountants and I've had to do a significant amount of cleaning up in some cases to get those clients as tax efficient as possible. Especially when VAT registrations and capital allowances have been mismanaged in the past.

This leads me to believe that I can add a significant amount of value to a lot of businesses out there who want to use my services and contrary to some comments on this forum I can call myself an "accountant".

I've always firmly believed that the worst accountants aren't the ones that ask obvious questions but the ones that don't ask at all as aren't interested in developing and unfortunately it can be intimidating to post on here sometimes because you don't know if people are going to try and undermine your confidence.

That said though most of the other accountants on this forum have been so helpful over the last year and I can only repay that debt by helping the next generation of accountants in the same way that I had been helped by all of you.

 

 

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By Hannah Carlisle
20th Apr 2015 11:22

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By Hannah Carlisle
20th Apr 2015 11:54

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