Interesting case on how HMRC can totally screw you

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Had this appeal failed then HMRC could have got a PLN and basically confiscated this guy's wealth without any justification.

http://financeandtax.decisions.tribunals.gov.uk//judgmentfiles/j11057/TC...

It seems it was only luck in eventually finding a good tax adviser and a good barrister that saved him, but the tax system should not allow this possibility of a huge HMRC windfall (from a taxpayer simply missing an appeal deadline for a totally unjustified assessment) in the 1st place - especially when HMRC can just sit on an enquiry indefinitely with no sanction for them. Shame on HMRC for having the gall to challenge this appeal and potentially ruin this person without any justification.

A similar case is here: https://www.telegraph.co.uk/finance/personalfinance/tax/11664541/HMRC-de...

Where I note and agree with the quote "Taxpayers should be given a "safety net" to stop similarly absurd assessments of unpaid tax, said Mr Hubbard of Baker Tilly."

The usual "fair assessment" safeguard in paras 33 & 45 of the case below only applies where there is a valid substantive appeal against HMRC's assessment before the Tribunal and there are zero safeguards if there is no possibility of such a valid substantive appeal (for whatever reason), which surely must be wrong.

http://financeandtax.decisions.tribunals.gov.uk//judgmentfiles/j11051/TC...

This safeguard is mentioned also at para 119 here re requirement under s29(1) TMA for assessment to be reasonable/honest:

http://financeandtax.decisions.tribunals.gov.uk/judgmentfiles/j11061/TC0...

See also para 179 here: http://financeandtax.decisions.tribunals.gov.uk//judgmentfiles/j11081/TC...

See also "in terrorem" assessment against a disabled taxpayer (lacking full mental abilities at least) quashed here: http://financeandtax.decisions.tribunals.gov.uk/judgmentfiles/j11298/TC0...

NB having a rubbish tax agent can also screw you if it causes a missed appeal deadline and the agent is uninsured etc. See: http://financeandtax.decisions.tribunals.gov.uk/judgmentfiles/j11297/TC0...

But this similar case re rubbish agent went in taxpayer's favour: http://financeandtax.decisions.tribunals.gov.uk/judgmentfiles/j11288/TC0...

But companies treated differently here it seems: http://financeandtax.decisions.tribunals.gov.uk/judgmentfiles/j11297/TC0...

 

Replies (13)

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By 2003bluecat
18th Apr 2019 11:57

s51.3 sums it up nicely for me. In fact, S51 as a whole.

I would like to say HMRC's lack of not just competence but common sense surprises me, but sadly that day is long gone.

I would hope someone would get in serious trouble for this, but again that would need some level of organisation.

No wonder HMRC didn't call Mrs Beck as a witness.

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Replying to 2003bluecat:
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By Justin Bryant
18th Apr 2019 14:45

Yes indeed. He was also lucky to have a sensible judge. Unfortunately a lot of FTT judges are total rubbish (sensible ones are in the minority) and this could easily have gone against him with such a judge. I have seen such judges refuse permission to appeal for people who have suffered depression etc. and therefore have missed the appeal deadline (causing a life changing and most probably unfair over-assessment to be visited on the vulnerable taxpayer) and appeals to the UT for refusals of permission to appeal are very rare.

Worryingly stories of very bad judges are commonplace. Here's one from today's news for example:

https://www.lawgazette.co.uk/law/court-of-appeal-sets-aside-absurd-care-...

So, overall the story here is about how HMRC actually positively want to knowingly screw you (and no doubt take much pleasure from that process)!! (Sound familiar re the loan charge?)

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Stepurhan
By stepurhan
18th Apr 2019 13:48

It is horrifying that this should happen, but the result is eminently pleasing. My favourite line was

Judge wrote:
The total of supposedly unpaid PAYE was unreasonable, even ludicrous.

One would like to think that all those involved at HMRC had major retraining with their power to act independently severely curtailed at the same time. Sadly I suspect that will not have been the case.

Thank you for sharing this.

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By Justin Bryant
25th Apr 2023 10:54

Another example here of how HMRC can screw you. They can just issue a (totally unreasonable) penalty/assessment etc. against a company that goes (or has gone) into liquidation. It is virtually certain the liquidator won't act quickly enough to appeal it in time (for one reason or another, as there is usually no incentive for them to do so) and so based on this case you'll likely get stuck with that penalty/assessment etc. that can potentially be visited on the directors.

https://assets.publishing.service.gov.uk/media/643fcdba6dda69000d11e07e/...

Harsh.

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By fawltybasil2575
25th Apr 2023 13:51

@ Justin.

Many thanks for providing the link to the recent “Uddin/Kazitula” case(s) (and indeed for similar posts in recent times re other late appeal cases).

I have not “checked every word” of the case(s) for which you have provided the link, but have read large parts. I have also not seen the FTT case(s) which preceded it (perhaps you have read them yourself). A couple of points please:-

(1) You say that, impliedly for one or both cases, the “penalty/assessment” were (impliedly the quantum of the assessment – perhaps you have no qualms re the percentage(s) used for the penalty calculations, but no doubt you will wish to clarify) “totally unreasonable”.

I cannot readily see, from the UT case itself but perhaps you have seen something in the FTT case report, where the UT were asked to consider the methodology of the figures on the assessment(s), or indeed whether the Appellants’ Counsel referred to that methodology. Could you please advise where, in the UT report or the FTT report, the methodology was considered (if not referred to therein, perhaps you would advise in what sense you are sure that the assessment and penalty were both “totally unreasonable” - to assist my greater understanding).

[In digressing slightly, I note from your earlier posts your link to the beauty parlour case, in which the FTT, clearly with ample justification, dismantled the methodologies used by HMRC in issuing assessments, describing them as “ludicrous” – IMHO they were so “ludicrous” that the appeal system should have ensured that severe penalties were imposed against HMRC, but that is another story !).

However, whilst a digression, can I ask you whether you consider that, as part of the Appellants’ cases [in Uddin and Kazitula], it would have been appropriate/advisable, for Counsel and/or the UT, to question the methodology used.

(2) With respect of course, I feel that your post is slightly misleading in referring, in commenting upon the “delay” aspect, ONLY to the delay by the liquidator – the case report indicates that there had been a substantial delay BEFORE the liquidator was appointed.

Perhaps you would kindly respond when time permits [feel free to couch your responses in your trademark “colourful” tones !].

Regards.

Basil.

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Replying to fawltybasil2575:
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By Justin Bryant
25th Apr 2023 14:04

Basil, as usual, you are doing your wonderful OTT (mis)analysis. I put (totally unreasonable) in brackets for the obvious reason that it could not be determined so in this case (but it can be assumed in some liquidation cases that that's gonna be the case, as with the other above examples involving mentally ill taxpayers etc. - who do not have a monopoly on HMRC oppression/nastiness).

In any event, clearly the assessment/penalty does not have to be totally unreasonable for this to be an HMRC taxpayer screwin g mechanism, as you are potentially effectively unjustly denied justice either way.

See para 46 here re how liquidators are not incentivised re HMRC and indeed how they may be incentivised the wrong way.
https://www.bailii.org/ew/cases/EWHC/Ch/2021/1627.html

And also para 104 here: https://www.bailii.org/ew/cases/EWHC/Ch/2021/142.html

Furthermore, even if the liquidator is (eventually) cooperative, he's hardly likely to admit being tardy to help any PTA appeal is he (so it will just be the taxpayer's evidence on that and that clearly was not sufficient to help in the above case i.e. the FTT's/UT's response to that inevitable delay was basically "tough luck")?

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By fawltybasil2575
27th Apr 2023 14:10

Justin.

With respect, your opening words:-

“Basil, as usual, you are doing your wonderful OTT (mis)analysis. I put (totally unreasonable) in brackets for the obvious (sic – really ?) reason that it could not be determined”

are entirely incorrect, albeit as ever (as I said in my last post) “colourful”.

There was no element of “(mis) analysis” in my questioning your words “totally unreasonable"- by no means was it “obvious” to me that you entered those words in brackets to signify that “it could not be determined” and, sadly lacking in powers of clairvoyancy, it was impossible for me to interpret your use of brackets in the manner which you now state.

There are indeed methods of construction, in expressing views in writing, which would have enabled you to make it clear that “it could not be determined”, but merely entering those words in brackets was most certainly not one of them !

[Whilst not inviting any response, I must add that your words “as usual” “wonderful” and “OTT”, are all also a touch wayward, but respect your apparently believing to the contrary !].

I shall consider the remainder of your post when time permits (thank you in advance if, as I expect, they contain helpful comments re the other matter which I raised in my last post).

Basil.

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Replying to fawltybasil2575:
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By Justin Bryant
27th Apr 2023 15:22

Wonderful (as ever).

The simple point here is that HMRC can easily screw you if they have a meritless PLN etc. claim where your company has gone into liquidation (compared to it not being liquidated), thanks to this rather harsh UT "tough luck" PTA refusal judgment.

I doubt many fair and sensible people would disagree with that view.

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Replying to Justin Bryant:
By Ruddles
27th Apr 2023 16:01

It is true that HMRC would have a large part to play in such scenarios but I would argue that if anyone is doing the "[***] over" it is the liquidator or other responsible person failing to appeal on time. That seems to be particularly the case in respect of the first of the two examples cited above.

I take the point about there being no incentive to appeal but HMRC can hardly be blamed for someone else's inaction.

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Replying to Ruddles:
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By Justin Bryant
27th Apr 2023 16:32

I'm blaming mainly the harsh UT judgment here in not taking sufficient account of the reality of company liquidations in their "TOUGH LUCK MATE!" decision. It's HMRC's job (at least as far as they're concerned) to screw taxpayers in case you weren't aware and this bad judgment just helps them do that is all I'm saying.

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By Justin Bryant
03rd May 2023 11:17

Another mental illness case here by the look of it: https://financeandtax.decisions.tribunals.gov.uk/judgmentfiles/j12727/TC...

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Replying to Justin Bryant:
By Ruddles
03rd May 2023 11:31

What is it that they say about a person representing himself in court?

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By Justin Bryant
14th Sep 2023 13:55

Another example of this permission for late appeal problem doing down another (apparently) unfortunate taxpayer here:
https://www.bailii.org/ew/cases/EWHC/Ch/2023/2213.html

There are no proper safeguards for wayward HMRC post or mentally vulnerable taxpayers etc.

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