Two recent tribunal decisions backing taxpayer complaints against unfair penalties highlight double standards in the tax system and the need for an independent complaints procedure for tax disputes, according to ICAS tax director Derek Allen.
In his 19 September tax update on the Scottish institute’s website, Allen drew attention to two recent tribunal cases as evidence of HMRC’s “asymmetry of standards”, where it makes “many mistakes but suffers no sanction yet expects perfection from taxpayers.”
Allen, a former Inland Revenue inspector, said HMRC’s organisational culture is “cynical” and called for an independent review of tax disputes.
The complaint echoes critical comments about penalty notices issued by HMRC and disagreement over reasonable excuses for late returns that have been raised by AccountingWEB members (and tribunal judges) in recent months.
In DWS Environmental Ltd v Revenue & Customs (TC01325), published in July, the tribunal judge overturned surcharge penalties for late payment of VAT by a water cooler supplier.
Writtle College Services Ltd v Revenue & Customs (TCO1325) involved an appeal against a penalty for the late filing of P35 returns. On 8 April 2010 Writtle College Services sent its P35 return to HMRC but didn’t realise that in order to make a successful submission it was necessary to untick the test submission box.
The tribunal found the company had a reasonable excuse and the penalties were not due.
HMRC did not respond to a request for comment on the tribunals and Allen’s comments.