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Student fined £1,300 for late tax return

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24th Apr 2015
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HMRC was entitled to fine a former student £1,300 for submitting a late tax return that wasn’t his responsibility, a tribunal has decided.

Jack Dyson, in Jack Dyson v HMRC, TC04336 ran the business in partnership with another student, Mr Walker, as part of his course.  

Walker was designated as the 'representative partner' responsible for filing the partnership tax return.

Walker filed his tax return six months late on 21 May 2014. HMRC issued a penalty of £1,300 to each partner. After this, Walker paid the penalty but Dyson sought to appeal, on the basis that he had provided all of the information to Walker and therefore he had a reasonable excuse for the late filing of the return.

The tribunal didn’t decide whether or not he had a reasonable excuse. This is because under the law only the representative partner can appeal against a partnership penalty. And Walker had not appealed against the penalty charged by HMRC.

There was probably little or no tax due on the business, only lasted one year and made a profit of £1,356. As the pair were full-time students, they probably earned less than the personal allowance so no tax would have been due.

Although the case was decided according to the law, George Bull, senior tax partner at Baker Tilly, said it showed the need for review of how “automatic penalties can lead to an unfair result”. There is currently a consultation on this issue.

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Replies (20)

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By 7555775
27th Apr 2015 11:58

And the message is
Don't bother starting your own business

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By Theroper
27th Apr 2015 12:24

Another message is...
...get your returns in on time.

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By kobi
27th Apr 2015 12:25

How can I report my accountant for defraud
I had an accountant whom I trusted with my tax returns and PAYE account he has pocketed an amount nearly £10000 from 2010 to 2011 the money was to pay my PAYE now HMRC is trying to make me bankrupt I don't no what to do can anybody advice me what to do thanks

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By 7555775
27th Apr 2015 12:41

Theroper
I wasn't being serious! Yes he should have taken his responsibilities seriously and made sure it was done probably by appointing an accountant.

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By Laurence52
27th Apr 2015 12:51

Must have sent a paper return

Student must have filed a paper return to have been penalised £1300. Penalty for filing online works out at £410, a saving of £890.

 

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By trecar
27th Apr 2015 13:01

Astonishment

I cannot believe the comments so far to this article. They completely miss the point and make erroneous judgements. The assumption is that what little profit existed most probably gave no rise to a tax charge so the exchequer did not lose any income. Instead the revenue have sought to use the penalty regime as an income raising exercise. The defendant had no right to bring an appeal under law because he was not the reporting partner. So he ended up paying a penalty because of the failure of his partner and has no legal redress under the taxing statutes. His only recourse seems to be that of suing his partner. Once again we see the poor quality of the code despite its massive quantity. It's about time we got a chancellor with some genuine commitment to tax simplification and equity.

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Replying to Wanderer:
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By 7555775
30th Apr 2015 13:50

Re don't bother starting your own business
I meant exactly this sort of thing.

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By taxbakbristol
27th Apr 2015 13:07

THIS IS WRONG!

Some one cleverer than me said that for EVIL to prosper all that has to happen is that other men ignore it!

THIS IS WRONG!  End of story!  No tax lost just sheer fiscal vandalism by HMRC.

How much longer are we going to put up with this Organisation that is fit only for the scrap heap.

I for one say THIS IS WRONG and my name is SPARTACUS!

We must not blandly acccept the tutter lack of humanity and morality this is a byword for this MONSTER!

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By taxbakbristol
27th Apr 2015 13:15

YES....I am very angry!

Forgive the Typos but if you cannot see what is wrong with this then time for a career change!

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By Alonicus
27th Apr 2015 13:30

Kobi - you should probably start a new thread rather then taking this one off topic.

For what it's worth, the first thing you should do is gather all the evidence you have to prove what has happened.  Have you contacted your accountant to see what they say ?  If they are avoiding contact, talk to their professional body, assuming they have one. 

But if the situation is as serious as you make it sound, people on a forum can only offer so much help, you really need to get professional advice, both from a good accountant, and possibly also from a solicitor. If you genuinely think your ex-accountant has stolen the money, you'll need very good documentary evidence, both to go to the police with if it comes to that, and also to avoid being accused of slander if it turns out that it's a false accusation.

You need to keep in contact with HMRC, but ideally appoint an accountant you trust to do this for you, to ensure that HMRC don't try to intimidate you into agreeing anything you shouldn't.  Good luck.

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Stepurhan
By stepurhan
27th Apr 2015 14:04

Consultation

A lot of emotional responses here. Most of which seem to ignore the reality.

It's the law. Neither HMRC or the courts have any leeway on this matter. The way some people are responding, you would think HMRC had actively participated in the return being late. Only if they had taken actions to increase the penalties (anyone got evidence of that?) could they justifiably be accused of engaging in a revenue-raising exercise.

The fact is, the penalty was correctly raised in accordance with the law. So if you feel that strongly about it, get involved in the consultation to change that law. If you think the consultation is not enough, lobby your MP about it. Bemoaning HMRC and the courts enacting the law as it is currently written does no-one any good.

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Replying to Jan Hobbs:
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By GARRY GREEN
27th Apr 2015 14:44

Sensible comments at last!
 

Sensible comments at last!

 

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Replying to Jan Hobbs:
Ronthetax
By ronlfoot
28th Apr 2015 09:55

No leeway?

Didn't  HMRC find a huge amount of leeway in cases like Vodafone and Goldman Sachs?

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Replying to Jan Hobbs:
By taxbakbristol
30th Apr 2015 05:43

Agreed

What I want to see is fairness across the board.Its very easy to impose needless and harsh fines on easy targets such as students.

What about the big companies ? I do not see or read a lot about any of these being investigated OR fined heavily .Maybe Im missing the court cases.

HMRC have a great deal of leeway in these matters and yes I do think that the fines and penalties are simply a revenue raising exercise.

I thought that the Chancellor was going to make tax simpler ? Why should he when to keep it complicated generates revenue!

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By halblackburn
27th Apr 2015 14:49

It's not over until ...

see para 27(2) of the judgement.

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By Incharta
27th Apr 2015 15:29

It's the Law, not HMRC's fault

Do you really think an MP dreamt the tax penalty regime up on his/her own? These regimes are designed and put forward by the civil servants running HMRC… they become law once the MP's have rubber stamped them so the fault does indeed lie with HMRC.

If 51% of senior civil servants had to come from the real world then these problems and unfair systems are far less likely to happen… but when someone has spent their whole career in the civil service (or as a politician) then their knowledge of how things really work will remain severely compromised and we will continue to have these cases of blatant unfairness and inequality

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By CORSALOVER2
27th Apr 2015 16:02

justice ..... !

About what you'd expect from a judge.

 

Too much law, not enough justice. 

 

Bah Humbug !

 

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By Caber Feidh
27th Apr 2015 22:18

The sympathetic Tribunal Judge gave Dyson good advice on options

Judge Anne Redston had no option but to interpret and apply the law as it stands. However, if you look at paragraph 41 of her judgment you will see that she said in her decision

“Mr Dyson may have remedies outside the tribunal, which may include asking HMRC to cancel the daily penalties if invalidly levied, asking for a stay of the daily penalties until Donaldson has been finally decided, complaining to HMRC, judicial review, defences to county court proceedings, a civil claim against Mr Walker and/or an appeal to the European Court of Human Rights. Whether any of these are possible is entirely a matter for him."

She thus seemed very sympathetic to him in his predicament and she gave him a lot of sound—and free—legal advice. Even if none of his other options were to succeed I would have thought he had very good prospects for a civil claim against Mr Walker, citing breach of contract (the partnership agreement) and, probably, tort as well. If his claim is for less than £10k then it should be on the small claim track where he can present his own case. [Caveat: I am not a lawyer]

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By CJMaslen
28th Apr 2015 14:40

Fine for late return

What happened to Common Sense?

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By taxbakbristol
01st May 2015 02:47

Your Obedient Servant

I am old enough to remember what HMRC were once !

HMRC  are still civil (not always) servants and are primarily there to gather tax .Not  acting as terrorists sniping at their" customers" . A sea change in their  attitude is called for and has been for the past 15 years. It is left to the accountant to see fair play and attempt a remedy where possible but it should not be like that.

I also wonder why the various Institutes do not  take up the cudgels on our behalf but they do not ! There is to much of a cozy attitude with them which gives HMRC the impression that all is well , when we know it certainly is not and getting worse.

 

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