SA penalty upheld in late authorisation case
A man who blamed delays in registering for online self-assessment for paying his tax late has lost an appeal against penalties.
In Figg v HMRC  UKFTT 578 (TC) a first tier tribunal sitting in Brighton ruled that Peter Figg did not have a reasonable excuse for paying his income tax late.
The case arose from a dispute over amounts the executive received from a relocation package for a post he ultimately didn’t take up. The job wasn’t the one described to Figg before he joined the company BG, the tribunal heard. When Figg left the company in 2011, BG paid him £30,000 for compensation for loss of employment and also an amount for accrued holiday entitlement.
BG had promised Figg that it would pay, tax-free, the cost of moving from his home in Susses to Berkshire for the new job.
But in June 2010 BG issued a P11D to Figg showing taxable benefits of £4,498 for the cost of temporary accommodation under the relocation package.
Figg realised he had to file an online tax return before the 31 January deadline but did not receive the HMRC activation code until after the deadline.
In his ruling, tribunal judge Nicholas Aleksander, said the tribunal understood that Figg wanted to discuss the taxability of his relocation package with HMRC before finalising his tax return.
Unreasonably long delays by HMRC in responding to questions might be an excuse for filing a tax return late and paying tax late. But to have a reasonable excuse for doing so the problems should have been raised by the taxpayer with HMRC sufficiently in advance of the filing deadline to give HMRC a reasonable opportunity to respond, the tribunal said.
“If HMRC do not respond in time, it is always open to a taxpayer to file his return on the basis that he or she believes is correct, and to note the potential uncertainty (and the fact that the issue has been raised with HMRC) in the “white space” on the tax return (or the equivalent field in the electronic version),” judge Aleksander ruled.
The tribunal also ruled that Figg’s accountancy fees were not deductible against his employment income.
The case underscores the importance of paying attention to tax matters, according to Paul Eaves, the author of Eaves & Co's tax blog on AccountingWEB.