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Suspension of penalties

1st Sep 2021
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Interesting point on penalties in this 2020 FTT decision.  Although it is a direct tax decision, the principle applies equally to VAT.

HMRC had originally assessed penalties for deliberate behaviour. Under the legislation, there is no provision to suspend penalties. In contrast, penalties for careless behaviour can be suspended.

The Tribunal analysed the taxpayer’s appeal into three elements; see paras 67-69 for the summary decisions. As part of its decision, the Tribunal changed the penalty category from deliberate to careless. Of course, the taxpayer not being represented, was not aware of the possibility to have the penalty suspended. The Tribunal has power to order HMRC to suspend a penalty and took the opportunity to do so. The Tribunal did not have to refer the matter back to HMRC.

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