Member wins £5,000 PAYE penalty appeal
AccountingWEB member Philip Seligman struck a blow for fairness and proportionality this month when a first tier tribunal overturned his client’s £5,000 penalty.
A new penalty regime came into force on 1 October to put a £3,000 cap on late filing penalties, but AccountingWEB members are still fighting rearguard actions against much larger sums levied on businesses for failing to file PAYE and CIS returns on time.
The issue was raised once again last month by a simonp51 whose client received a penalty notice from HMRC for nearly £20,000 - 4% of its £500,000 annual PAYE bill - after habitually filing returns a day or two late. During a PAYE visit in March 2009 the inspector gave no indication the company was paying late, nor did he mention the possibility of any penalties.
In response, 10 similar cases were brought to light, one of which MacolmMcFaurlin succeeded in getting wavied under internal review due to disproportionality. Several others were heading towards the tax tribunal, including one client represented by Seligman, who appealed penalties on payments that were late by one day every month.
That hearing was held on Monday 24 October and a fortnight later word came back that the appeal was successful on the basis of reasonable excuse.
“At the tribunal I said that the payments were made in good faith as being on time and that my client genuinely, but mistakenly, believed the payments were made on time and that was why we were claiming reasonable excuse,” Seligman explained, referring to several of the cases listed in AccountingWEB’s Reasonable excuse scorecard:
- Anthony Leachman t/a Whiteley and Leachman (TC01125), where the tribunal judge held a genuine mistake was reasonable excuse.
- HMD International (TC01322), where the tribunal judge said there was no reason why HMRC shouldn’t send out immediate penalty notices.
- N A Dudley Electrical Contractors (TC01124) on fairness.
Seligman said that he got the idea to challenge his clients' penalty assessments while reading 'Taxation' magazine at the beach when he was on holiday, but added that the scorecard and various articles on AccountingWWB were invaluable in researching his case, so the celebrations can be shared around.
The decision in this case was dated 7 November, but has not been placed on public record yet. When it does appear, the case number should be TC/2011/06328. He has yet to hear the result of his other client's review, to which he submitted identical arguments.