HMRC’s habit of waiting several months before sending out penalty notices for late PAYE returns was roundly criticised last month by a tribunal judge in the case of HMD Response International v HMRC last month.
“We are in no doubt that such a body does not act fairly when it deliberately desists from sending a penalty notice, for four months or more, knowing that the effect will be to impose a minimum penalty of £500 upon somebody whose sin may amount to no more than oversight or forgetfulness,” commented Geraint Jones QC in a judgement striking down HMRC’s £500 penalty claim against the charity.
The decision represents another defeat for HMRC’s stance on “reasonable excuse”, with the tribunal ruling that the condition could apply to a person who genuinely and honestly believed that a successful online filing had taken place. In the judge’s interpretation, an appellant should not have to prove some exceptional circumstance to qualify for the concession. “HMRC has quite wrongly sought to elevate to something more onerous than the test specified by Parliament,” the HMD Response ruling noted.
The first tier tribunal decision does not set a legal precedent, but is further evidence that following the Jusilla v Finland European Court of Justice ruling in June, tribunal judges are taking a harder stance on the legal basis HMRC’s penalty regime. Further commentary on this topic is available on our Reasonable Excuse Scorecard.
If you are aware of similar appeals or tribunal rulings - successful or not - on reasonable excuse, please let the rest of the AccountingWEB.co.uk community know.