Donaldson appeal holds up tax penalty cases

Taxpayers who are appealing against daily penalties for late tax returns face delay and uncertainty after HMRC appealed against a recent tribunal ruling.

In May, taxpayers won a tribunal appeal (Morgan v HMRC and Donaldson v HMRCTCO2720) against daily penalties for laet filing because HMRC failed to give notice to the taxpayers of the date from which the daily penalties would start to accrue.

The decision sparked a lot of interest among AccountingWEB members because it could act as a precedent for similar cases.

But the taxpayers' tribunal victory may not...

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Comments

"Continue...

Ted Numbers | | Permalink

...to issue and collect late filing penalties" incorrectly, according to the FTT's decision? Thus flaunting that decision?

 

And they wonder why taxpayers who could be affected by someone else's loss at the FTT don't just cough up?

HMRC's motive

Slainge | | Permalink

I do not think FTT's have any wider binding effect other than to that specific taxpayer (unlike higher tribunals or Court of Appeal etc). So there is no obligation on HMRC to apply the outcome to other tax payers (and sometimes HMRC let a lost case go at FTT rather than appeal and have some higher court decision go against them where a precedent is created and will need to be applied by HMRC to other cases on all fours).

And the fact that HMRC disagree with this case and that it is going to be appealed makes their position not unreasonable.

Of course if we are talking about is the penalty regime fair and equitable in the first place then that would be a different answer.

Regards

Slainge

 

carnmores's picture

we have an interesting take on this

carnmores | | Permalink

a client was not issued with a return for a year but we submitted a return anyway showing no tax payable but god bless 'em they have raised a penalty of £1,200; in case you were wondering we returned to prove that client was an habitual resident . what an omnishambles! 

Late notification    1 thanks

The Black Knight | | Permalink

carnmores wrote:

a client was not issued with a return for a year but we submitted a return anyway showing no tax payable but god bless 'em they have raised a penalty of £1,200; in case you were wondering we returned to prove that client was an habitual resident . what an omnishambles! 

think that ones a late notification not a late return.

it is a shambles

 

I am sure the writer of the legislation intended that notice should be given and they have not.

the backdating clause is what causes the confusion.

If the notice backdated is the issuing of penalty then you would not need the notice clauses at all.

You certainly don't have notice for other penalties do you?

Trouble is HMRC think they can do what ever they like and I do wish they would use their significant powers for what they were intended rather than abusing them in some attempt to beat some more tax out of the already compliant. "taxation without representation is" indeed "tyranny"

That's our Job I guess! keep up the good fight!

Appeal Held Up

Tessie73 | | Permalink

My husband had a late penalty charge with daily fines added.  He went through the normal stages of requesting a review.  He gave a full and clear justification for the causative reasons for the late return.  It was rejected and he was told he would have to go to a Tribunal Appeal.  However, HMRC applied to the Tribunal to have his appeal struck out.  What nonsense.

After reading the Donaldson Case - it transpires that an officer of HMRC does not even review the cases as it is done by a computer. Also, HMRC letters state it 'can' impose £10 daily fines, not that it 'will impose daily fines'. HMRC are choosing to make it absolute without giving any fair review of causative situations for late filing.

I strongly hope HMRC lose their appeal.

lionofludesch's picture

Ask your MP this

lionofludesch | | Permalink

Scenario One. Taxpayer understates his tax by £1000.  Penalty £1000. Scenario Two. Taxpayer reclaims his £10000 tax repayment seven months late.  Penalty £1300. Get your MP to ask the Chancellor why he reckons Scenario Two is more heinous than Scenario One.  Or - has it not been thought through very well ?

reasonable excuse

The Black Knight | | Permalink

Tessie73 wrote:

My husband had a late penalty charge with daily fines added.  He went through the normal stages of requesting a review.  He gave a full and clear justification for the causative reasons for the late return.  It was rejected and he was told he would have to go to a Tribunal Appeal.  However, HMRC applied to the Tribunal to have his appeal struck out.  What nonsense.

After reading the Donaldson Case - it transpires that an officer of HMRC does not even review the cases as it is done by a computer. Also, HMRC letters state it 'can' impose £10 daily fines, not that it 'will impose daily fines'. HMRC are choosing to make it absolute without giving any fair review of causative situations for late filing. I strongly hope HMRC lose their appeal.

It sounds as if your husband asked for a review on reasonable excuse grounds and that is another area of legal argument. Often what a tax payer thinks is a reasonable excuse will not be, although there have been some strange decisions at the first tier tribunal on this matter which has not helped matters.

The issue here is whether Daily fines can be charged at all if HMRC do not follow the legislation or deliberately misread it.As in not issuing the correct notice required.

I do wonder if you can only appeal on reasonable excuse grounds whether the First tier tribunal has jurisdiction over HMRC acting Ultra Vires?

 

No sense of proportion

wrilliams | | Permalink

We have a case of a non resident director who has UK income of only £7000 with no UK tax due.  Notices not received but HMRC say no evidence of this as they say the notices were not returned undelivered.  The ultimate £1300 penalty is vastly out of proportion to the income or any tax liability (nil in this case).  They refused to rescind the penalty on review.  Now awaiting result of Donaldson appeal.  Clearly HMRC are not applying any common sense to their decisions.

Request copies

The Black Knight | | Permalink

wrilliams wrote:

We have a case of a non resident director who has UK income of only £7000 with no UK tax due.  Notices not received but HMRC say no evidence of this as they say the notices were not returned undelivered.  The ultimate £1300 penalty is vastly out of proportion to the income or any tax liability (nil in this case).  They refused to rescind the penalty on review.  Now awaiting result of Donaldson appeal.  Clearly HMRC are not applying any common sense to their decisions.

Have you requested copies?

It is not uncommon for HMRC to make up any story they feel fit to fob you off.

Just concluded one where story changed twice as they wriggled to get out and fob us off with nonsense.

Some of the behaviour endemic in HMRC has no ethics at all.

lionofludesch's picture

Evidence

lionofludesch | | Permalink

What evidence do they have that the notices weren't returned ?

As opposed to them being binned on arrival by an overworked staff.....

HMRC have provided their

wrilliams | | Permalink

HMRC have provided their record of issue of notices.  Don't think there is any dispute that they were issued.  Whether they were received is another thing.

I agree - but getting them to

wrilliams | | Permalink

I agree - but getting them to admit that there might be any failure on their part is an uphill struggle!

stepurhan's picture

Double standard    1 thanks

stepurhan | | Permalink

I seem to recall seeing letters from HMRC stating that proof of posting by a taxpayer is not proof of receipt by HMRC. Should this not apply in both directions, given the fair and equitable tax system we are supposed to have?

proof

lh3f9764bg1g | | Permalink

Of course . . . . they can't even prove that they posted it unless it was SIGNED for and HMRC rarely goes to the expense of using one of the signed-for options for delivery.

Chris.

I entirely agree and with the

625VA | | Permalink

I entirely agree and with the pathetically WEAK institutes we have to pay our fees to who bow and scrape to HMRC, what chance to we have? "Working Together" is another name for "hmrc will tell the institutes what to do and the institutes are so grateful for HMRC's time!" We have no voice and our clients little justice!