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HMRC to appeal HOK penalty decision

5th Jan 2012
Editor in Chief (interim) AccountingWEB
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AIA

HMRC has confirmed that it is preparing an appeal against the first tier tax tribunal decision in HOK v HMRC, in which the judge criticised the department for unfairness and using the penalty system as a “cash generating scheme”.

HOK Ltd v HMRC [2011] UKFTT 433 (TC01286) is one of several cases last year in which tribunal judge Geraint Jones QC overturned late P35 filing penalties because HMRC waited several months before sending out notices. The HMD Response decision, detailed in AccountingWEB’s Reasonable Excuse scorecard, includes an identical conclusion from the judge: “In our judgement, the appellant is entitled to rely upon the common law duty of a public body to act fairly not just in its decision-making process but also in administering its statutory powers. We are in no doubt that such a body does not act fairly where 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 be no more than oversight or forgetfulness.”

As part of the ruling, the judge commented that it would be a simple matter for HMRC to program its computers to send out P35 penalty notices in May rather than September to avoid the fines piling up as they did in the HOK case.

This view - and the string of similar decisions from Jones and other tribunal judges - was not popular with HMRC, which described the arguments as “out of kilter” with the law.

“It’s no secret that we are preparing an appeal and the HOK decision was the most appropriate case,” an HMRC spokesman told AccountingWEB.

ICAS tax director Derek Allen highlighted the recent decisions in Working Together issue 46 and urged HMRC to adopt a process that respects the tribunals’ stance to ensure taxpayers’ human rights are protected.

In reply, however, HMRC director of central policy Sue Walton argued that HMRC does not treat late filing penalties as a money-making exercise. “Our aim is to minimise the number of cases in which penalties arise,” she wrote.

“Nor does HMRC deliberately hold back from issuing penalties or reminders in order to charge greater penalties. The reason why we do not issue penalties immediately when a P35 return seems to be late is to allow a reasonable period for employers to tell us they have no return to make. This avoids penalties being issued to those who didn’t need to operate PAYE in the year concerned, but who didn’t let us know until after the deadline.”

HMRC has no specific responsibility to remind people to put in their returns or when a trigger point for a penalty may be imminent, she added, and cannot provide a  general reminder service.

“The structure of tax law is built upon the principle that it is a taxpayer’s responsibility to ensure they comply with their tax obligations. If a taxpayer has a reasonable excuse for filing late,  they should let us know, so the penalty can be reviewed and, if appropriate, removed. However, we will robustly defend our decisions to charge penalties where taxpayers have failed to comply.”

Replies (42)

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By Exector
06th Jan 2012 12:02

Disingenuous response as per habitual practice from HMRC.

The comments made by the FTT were not at all centred on challenging HMRC's right "to charge penalties where taxpayers have failed to comply" but primarily on the fact that they did not act to apply those powers appropriately and timeously.  They have also studiously ignored the key comparison made by the Tribunal in the case on the practice of the erstwhile separate Customs and Excise with VAT penalties who manage to take simliar action in much reduced timescales. As they are now part of one and the same Bureaucracy, there is no good cause for the Revenue arm to continue to adopt an approach that so artificially boosts the penalty take by lack of appropriate action at the apposite time.

 

 

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By hiu612
06th Jan 2012 10:54

I agree

The idea that they do not send notices so as to allow time for taxpayers to inform them they have no need for a PAYE return is absurd. How many penalties, i wonder, have been issued where clients have failed to file an expected return on the basis that no reportable transactions were undertaken? I have certainly seen instances of this.

Presumably the phrase "most suitable" translates into "best chance of winning".

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By Eric Robinson
06th Jan 2012 10:57

Very disappointing

"The reason why we do not issue penalties immediately when a P35 return seems to be late is to allow a reasonable period for employers to tell us they have no return to make".

 

Fetch me a needle and cotton, my sides have just gone again..................

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Tom McClelland
By TomMcClelland
06th Jan 2012 11:00

Disengenuous...

“Nor does HMRC deliberately hold back from issuing penalties or reminders in order to charge greater penalties. The reason why we do not issue penalties immediately when a P35 return seems to be late is to allow a reasonable period for employers to tell us they have no return to make. This avoids penalties being issued to those who didn’t need to operate PAYE in the year concerned, but who didn’t let us know until after the deadline.”

Ah, so they don't issue the penalties for 4 months because of the huge number of employers who magically remember (without any reminder) between May 20th and September that they should have filed a nil return even though they didn't remember that by May 19th. Beyond parody.

There is absolutely nothing to stop HMRC from issuing the P35 penalty notices on 20th May, for £100 rather than September's £400. And the nil-returners whose memories startlingly improve over time would still be able to waive the penalty by filing the nil return AFTER receiving the notice.

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By simonwwhitt
06th Jan 2012 11:03

Crooks

If a private sector business were to operate like this they would (rightly) be branded as crooks.

But HMRC (and Government in general) is of course above the law.

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Replying to elliottchandler:
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By chatman
06th Jan 2012 13:05

Corrupt UK.

simonwwhitt wrote:
If a private sector business were to operate like this they would (rightly) be branded as crooks.

Unless they had a friend in the government. That usually seems to work in the UK these days.

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David Ross
By davidross
06th Jan 2012 11:07

.... and don't forget that they ignore Nil P35s

I have had numerous cases where I hold an email acknowledging that I had submitted a Nil P35 by structured email, on time.

It turns out that the data has to be manually moved from one computer system to another, but if that job is done after the first penalty deadline has passed, it is not cancelled. However in these cases the penalty notices, whilst only for £100, were only issued in the Autumn, suggesting that their issue was indeed deliberately held back.

I would be happy to supply my evidence of this to assist the taxpayers in the HMRC appeals, if they care to get in touch.

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By DHarris
06th Jan 2012 11:07

Not a reminder but a penalty notice
A single penalty notice is not a reminder service it is a penalty notice! I imagine that a notice for £100 costs the same to produce as a single notice for £400. One can only assume that £400 covers the cost of postage, etc better than £100.

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By Mallock
06th Jan 2012 11:09

What a waste of Public Money

If HMRC's real intent is to reduce the number of penalties and to help taxpayers to get it right then why are they appealing this - they should simply issue the penalties earlier.

How much is this case going to cost and how can these bullying tactics be justified?

If HMRC lose this case are those who have decided to take the action going to be held personally responsible for the costs - I don't see why not when they are pursuing a morally corrupt policy. 

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By verysmall
06th Jan 2012 11:14

HOK Appeal

Sue Walton says that HMRC cannot provide a general reminder service. Why not? Companies House do so for Annual Returns and Accounts, and they now provide the option to receive the reminders by email. Copy this method or flash reminders on the employer's PAYE online account.

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By Barkster
06th Jan 2012 11:46

What a load of rubbish

HMRC seem to manage to send "General Reminders" for SA returns, as they are doing right at this moment.

They also seem to be able to get CIS return penalties out within about 48 hours of missing the monthly deadline.

For some reason it seems peculiarly difficult to get a PAYE scheme cancelled.

I have a client who had employees, but none in the last couple of years, but continues to have CIS. I filed no P35 as one wasn't due, and in September a £400 penalty turned up, and this was after contacting the Revenue to explain what the situation was some 18 months previous (as I could foresee this happening).

I think they should be issuing reminders BEFORE the 19th May to everyone from whom they expect to receive a P35 and have not, as yet, received it (in the same way as they do for SA returns). But I suppose this would unacceptably deplete the penalty take from all those poor folk who just blindly pay up the their £400 (it was 9 months and £900 a couple of years ago !!).

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By Pradip Shah_1
06th Jan 2012 12:01

SUBMISSION OF NIL P35'S

I submitted a Nil P35 using the HMRC email Service [ difficult to navigate ] . on 13 April 2011. As I did not get an email acknowledgement or confirmation of receipt of the same, I phoned the HMRC Online help desk to find out if there were any problems ? I spent more than 4 hours speaking with different people accros the Online Desk, most of whom had no idea of Nil P35 Returns. I had to phone the following day again. Again I spent quite a lot of time. Finally a gentleman advised me that my email had been loged, however I would not be getting an acknowledgement or confirmation, however he provided me with his details in the event that I receved a Penalty Notice. I finally got an acknowledgement on 10 August 2011.

The reason I had to file a Nil P35 was that this particular Tax Year there were no Employees and I was advised by the gentleman [ above ] that Employers or Agents are not allowed to file Nil Returns using any Payroll Software as they had to deal firstly with P35's that involved employees.

The easiest solution is to allow anybody to file Nil P35's using whatever software and to receive an automatic acknowledgement and confirmation from the HMRC just like Self Assessment etc.

This would obviate the need for everbody including HMRC and the Courts to waste time and resources.

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Replying to Time for change:
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By Metrobrit
06th Jan 2012 15:38

Nil Returns

I must agree with Padip here and other posters the first  real problem here is the inability to file a Nil return except by an outdated email method which is totally unreliable. I have fought one case this last year by producing copies of the email notifcation which they of course denied ever receiving.

If only our usual payroll software could simply have a Nil return button it would be much easier, and it could be dealt with in the usual way, with computer acknowledgements.

The other problem I have come across this year, is the re-registering of a business for PAYE three years after it de-registered without actually telling anyone. Hardly surprising then that someone fails to file a return, another issue which after months and months of letters and phone calls is due to the Revenue mis-typing a code into their system, and thinking that there was an employee on a defunct  PAYE record.

I would love to know statistically how many late returns end up as being Nil returns, I would be willing to bet it's a lot more than 50% and almost entirely due to the inability of the Revenue to deal with them.

 

 

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By pstoneman
06th Jan 2012 12:29

Late Submission

I have today received a letter from HMRC declining my appeal for late submission. The facts of the case are very similar to HOK. Payments were made on time. The Annual Return was thought to have been submitted. Only knew it had not been submitted on the receipt of a £400 penalty. Should I take this to the Tribunal Service or pay up?

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By pauljohnston
06th Jan 2012 12:32

Beggars belief

How many reading this have to go through the process of appealing penalties because HMRC have not told us that they are expecting a P35. 

Come on Susan Walton get into the real world.

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Nigel Harris
By Nigel Harris
06th Jan 2012 16:07

Outrageous!

I don't need to add to what has already been said other than to add my voice to the unanimous veridct that this is totally outrageous. HMRC just need to hold their hands up and agree to sort out their computer system to issue proper timely reminders in future.

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By P2
06th Jan 2012 16:16

I think the whole meaning of "return" may have been lost

"HMRC has no specific responsibility to remind people to put in their returns or when a trigger point for a penalty may be imminent, she added, and cannot provide a  general reminder service."

Remember the days when HMRC "sent" a form and asked it to be "returned".  Courteous and efficient.

Nowadays they do not even send the form in the first place.

The onus these days is for the taxpayer (sorry, "HMRC customer") to work out whether or not a form should be submitted. 

If they make the wrong decision and get it wrong..."stitch this"...a penalty notice is the first piece of HMRC correspondence that lands on the doormat (if not one of the "too-common" letters informing them of an imminent visit from the bailiffs).

(The latter are being thrown around like confetti at the moment)

Happy New Year to all

P2

 

 

 

 

 

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By weaversmiths
06th Jan 2012 16:45

Nil Returns - Outright incompetence

We had a client whose Scheme was closed by request and who had Penalties for late submission of his P35 issued for the following 4 years, even after Official Complaints were sent each year.   At the same time this client had a SA Penalty issued for non submission of his Return; we sent photocopies, then more photocopies only to find that HMRC had given him another UTR and had set him up a second time, of course we were correctly  filing under the original reference.   Hours of extra work  but how can you pass this on to a minute struggling  business such as this. The "structure of the law" did not come into this at all - just outright incompetence.

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By ncm65
06th Jan 2012 17:05

HOK and P35 Penalties

The approach of HMRC to penalties is ample evidence to justify the notion that if there is to be any general anti abuse rules, the operation of this rule must be kept out of HMRC's hands: they are incapable of operating with any semblance of objectivity and act upon the basis that the law is as they would want it to be.

The comments of Clegg and Cameron yesterday are cause for worry that the balance that was sought to be put into the Aaronson proposals will be put to one side by politicians who seem blind to the monster that HMRC has become.

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Chris M
By mr. mischief
07th Jan 2012 16:13

keep going!

I had a client who had two unfair penalties each for £400.  After a few letters spanning about 9 months they reduced it to £156.  I then went through 3 levels of HMRC internal review, all decided the £156 was entirely reasonable.

So I then filed Tribunal papers.  Two weeks later HMRC caved in without filing anything.  This organisation is supposed to be part of the civil service but has all the integrity of a bunch of spivs.

Don't let up on them!  File your papers at the Tribunals!

 

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By samuelspaniel
09th Jan 2012 11:29

Keep going!

I wholly agree that you should keep going.  If HMRC get something wrong they just deny it and it is about time they admitted their faults.  Perhaps you could ask for costs to be considered at the FTT.

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By nickja
09th Jan 2012 13:05

Reminders
HOK Appealverysmall PM | Fri, 06/01/2012 - 11:14 | Permalink

"Sue Walton says that HMRC cannot provide a general reminder service. Why not? Companies House do so for Annual Returns and Accounts, and they now provide the option to receive the reminders by email. Copy this method or flash reminders on the employer's PAYE online account."

 

Companies House are nearly as bad.      Miss a filing deadline for accounts and they'll issue a first penalty.    Forget to check whether a late submission made it into the CH system and discover that it didn't only when you go to file the next year's accounts and guess what?     You'll have a £1,500 late filing penalty precisely because the onus for receipt by CH is on you and it's CH policy not to issue reminders that the penalty clock is running - just the final penalty notice when the accounts are "successfully" filed.   £1,500 is a hell of a penalty for dormant company accounts that may or may not have been signed and mailed.

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By pauljohnston
09th Jan 2012 13:19

Nickja

But Companies House issue a reminder by paper or by email one month before the accounts are due. HMRC only rarely issue P35 reminders by mail and never by email.  If one is registered one may be aware because of a reminder posted in PAYE notices on line but I have noticed that we are not always told when such a notice has been posted. 

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By DMGbus
09th Jan 2012 14:01

HMRC - the UK's innovation engine for generation of penalties

The current ever-increasing stream of penalty imposition leads me to believe that there is one (or are more than one) individual(s) within HMRC who are doing nothing useful apart from helping the department increase it's penalty yield.  Innovation is certainly not dead within HMRC in this area!

Just look what's happenning:

# Penalties introduced for 2011 Self Assessment Tax Returns even when no tax liability / no tax lost to HMRC

# Penalties for repayment VAT returns being introduced later in 2012 I believe

# The truly evil CIS300 penalty regime

As basic tenet of the tax system surely there should a basic rule that if there's no tax due then there's no penalty - yet Parliament has allowed the evil to prevail.  Maybe Parliament has lost control of HMRC - WHY HAS THIS BEEN ALLOWED TO HAPPEN?

If we don't watch out we'll soon have a totalitarian tax regime that has gradually crept upon on us bit by bit and it'll be too late to turn things back to traditional fairness.

One positive thing about HMRC's appeal: if it get'as a FAIR HEARING then HMRC will lose and BEEN SEEN TO BE THE EVIL THAT THEY ARE IN THIS SCENARIO OF PENALTIES - and just maybe the tide of internal evil within HMRC can be turned back.  On the other hand if HMRC win then we as a nation have no hope of ever gaining (or regaining) a fair tax system.

Once the case is hopefully won for the taxpayer, then I'd like to see some high profile sackings - public service has no place for evil individuals, some individuals within HMRC must be brought to account for the evil regime of penalties that they are responsible for.

 

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By flurrymc
09th Jan 2012 16:14

corruptissima republica plurimae leges

As Tacitus said, there is an inverse correlation between the amount of legislation and the probity of the government. 

With the UK tax code now being the largest in the world is it right to conclude that the revenue authorities are also the least honourable?

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By kim walsh
10th Jan 2012 12:12

Smash and Grab

Decent, hardworking micro and small OMBs are lost in the overcomplicated bureacracy of running a business, not least that associated with the copious tax compliance.

 

The penalty system, especially CIS, is nothing but looting by HMRC.

 

Preying upon those taxpayers and advisors that do not have the resources to complain or fund the demanding of fair treatment by the governing body of the country they primarily are responsible for supporting financially.

 

Fairness has to be the basis of any tax system, supported by efficient management.

 

Descent into dissent and chaos might not be that far away.

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By raycad
10th Jan 2012 23:46

It comes from the top!

I was at the PFP Tax Investigations conference in London in November and the guest "external" speaker was Dave Hartnett.  During questions after his session I referred to the fact that an SA penalty notice was issued within 2 weeks of the filing deadline and not much longer than that for a late CT return.  I asked why, then, did it take four months to issue a P35 penalty?  (And likewise, I may say, for a P11D penalty notice.)

Mr Hartnett's flippant and indeed rather arrogant remark was that it was because the computers were programmed to do so!  Some delegates thought this rather amusing and laughed.  But far more hissed!  I reminded Mr Hartnett that the Tribunals had roundly criticised HMRC for what was seemingly a deliberate policy of "penalty multiplication".  As one contributor has mentioned, the penalty is in reality really £500 because the notices are sent out by snail mail and there isn't time to stop another month accruing!  Mr Hartnett simply ducked and dived on this point!  (I see that he is to stand down as permanent secretary later this year.)

I am not instinctively anti-Revenue - in fact I was an Inspector of Taxes for many years.  But I would hang my head in shame if I worked there now!  

Personally, I suspect that the problem lies with a flaw in the programming of the PAYE computer rather than a more sinister plot to deliberately multiply the penalties.  When these penalties first starting flying around three or four years ago I had an email exchange with a senior Revenue official responsible for the system and he came close to admitting this. 

But I do find it infuriating that there seems to be no will to tackle this issue and that top officials like Dave Hartnett and Sue Walton continue to try to defend the indefensible.  What we need is a Truth and Reconciliation Commission!

 

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By Trevor Scott
11th Jan 2012 12:50

"What we need is a Truth and Reconciliation Commission!"

I thought Dave & Co proved that the words "HMRC", "Truth" and "Reconciliation" simply don't go together, even for Parliamentary committee.

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Nichola Ross Martin
By Nichola Ross Martin
12th Jan 2012 09:59

What we need is a minister in charge of HMRC

The horrible truth about HMRC is that there is no minister involved in running it and it is going bad top down.

HMRC has no non-executives on its board of commissioners. The reason is apparently, according to the now disgraced Dave Hartnett down to tax-payer confidentiality. Bizarrely Hartnett was the only board member to claim to have a "deeper knowledge of tax" and that knowledge seems highly questionable given that he is the one that fluffed up the Goldman Sach's deal and agreed lord only knows what with other big companies.

The key point about Dave Hartnett, and this is no witch hunt, because he already leaving HMRC and a member of the House of Commons Public Accounts Committee has already accused him of lying to them, so little I say will be anything worse. He has been instrumental in promoting the idea that anyone who is short on tax compliance must be a cheat. He has said some extraordinary things about taxpayers and agents over the years (as mentioned above too) and seems to have developed a fair old chip on his shoulders from his days working in HMRC investigations. This attitude is not what we would expect from the Permanent Secreatry of HMRC - hence my comment about the need of a minisiter and non-execs on HMRC's board. HMRC needs as reality check and no more so than when it comes to this new penalty regime.

Business owners are not all tax cheats. In the real world some people are not good at filling out forms, some are not good with numbers, some are not good with the internet, or have no broadband, some are just stressed out and it is not always easy to delegate. In a recession you may not have the funds to delgate all your annual filing obligations.

HMRC could have set up system where you have "one strike" and then you are out. So if you had a second offence then you would be penalised. That would free up a lot of the Tribunals time and makes a lot of sense in terms of ensuring future compliance. However, sending penalty notices late deliberately seems to me like an abuse of the rules and it should cease. Companies House is as bad too. 

Lets hope that Geraint Jones QC will continue to expose HMRC's unconscionable behaviour.

 

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By taxhound
18th Jan 2012 17:01

Absolute Tosh

"The reason why we do not issue penalties immediately when a P35 return seems to be late is to allow a reasonable period for employers to tell us they have no return to make".

And yet 6 weeks from 6/4 to 19/5 is deemed ample time for even the biggest employers to complete and submit their P35s.

But "employers with nothing to report" somehow need longer....

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By samuelspaniel
19th Jan 2012 08:51

The Sad Facts

I too am not instinctively anti HMRC, however, one's attitude towards them becomes severely tested by what can only be described as their deceitful approach at times.  If we as accountants were to act as their officers act at times then we all know that HMRC would delight in having us hauled before the bench - SEND HIM DOWN!.  Perhaps HMRC should take a serious look at themselves and ask if they truly believe they are acting in the interests of their employers who just so happen to be the taxpayers of this land.  Honesty is a two way thing - How about it HMRC?

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By Exector
19th Jan 2012 17:41

Sad, but true

To be honest, I think it is only going to be by a process of appeals to natural justice, shame and passive Ghandhi-like opposition that we are likely to get a change in practice from HMRC. I do not now forsee proceedings before the FTT and general attempts at generating positive case law to be ultimately successful- Justice Geraint Jones looks to be a rather lone voice on this issue and there have been a lot of adverse decisions recently by the FTT on this topic by tribunals who look to insist on taking a restrictive effectively literalistic view of the statue and not a gestalt take of its wider context and effect and unwilling to look beyond the statutory construction to the actual behaviour and effects of HMRC (inefficiently, deliberately or not) applying the law.

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Nichola Ross Martin
By Nichola Ross Martin
23rd Jan 2012 11:36

Sad, but not quite so true

Anne Redstone seems to be making some pretty sensible decisions.

Also, although each case must be decided according to its own particular facts and the law applied to those, there is an art to presenting your case in the best light. It may often be the case that an honest sounding taxpayer who has taken the trouble to gather and present their evidence will elicit more sympathy from a Tribunal than one who has ignored warning letters and is generally disorganised.

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By DMGbus
27th Jan 2012 13:30

Presenting a false impression of fairness

I rather susect that two very recent relaxtions with regard to the 31st January 2012 Self Assessment filing deadline have been published to give the false impression to the world that HMRC is an organisation that is full of fairness and good faith (and therefore by definition any penalties that it levies are wholly justified).  

 

I do wonder if someone within HMRC has done a cost-benefit analysis and come up with the conclusion that losing some penalties for 2011 self assessment tax return late filings beyond 31st January 2012 (and gaining a "good" image) will be more than outweighed financially by the evil P35 penalties that might be supported if it wins the HOK Ltd case as a result of a tribunal being fooled.      

 

In the light of this expression of "fairness and good faith" will the decision maker at the HOK Ltd appeal be mislead by this latest smokescreen into allowing HMRC's appeal?

 

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David Ross
By davidross
08th Feb 2012 12:50

A second wave of £400 penalties has started

Having sent out a first wave of £400 charges to September, those who have not managed to put a stop to this rubbish are now getting a second lot, to January. So HMRC clearly has a policy of waiting and charging in £400 blocks.

I phoned about the one I had and the nice lady said that both for this client (totalling £800) had been discharged on 3 February when they came across my objection to the first one (it having been too late to take it off the second 'run')

But it appears that no-one at the HMRC end is reviewing the Nil Returns sent by structured email that were acknowledged in July, so only those who object get action.

As far as the demands sent to dormant or dissolved Companies, HMRC can chase itself up its own backside, I'm no longer bothering about these.

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By p.seligman
24th Feb 2012 08:58

Tribunal staying appeals - waiting for Hok

Appealed to the First Tier Tax Tribunal against P35 penalties of £400 + further £100.  Tribunal have issued a direction for the appeal to be stayed for 60 days until the Upper Tribunal has issued its decision in the Hok Ltd appeal at the Upper Tier Tribunal.  I have objected and requested my client's case be heard by differentiating our circumstances with Hok. 

The reason we differentiated our client's case is because our client considered that the return had been filed within the time limit and received an acknowledgment email from HMRC.  The email was identical to the acknowledgement email received from HMRC when the return was successfully filed in October 2011. Whereas in Hok, the appellant accepted that the return had not been filed until the October. We also argued that, as in the Hok case, HMRC should have notified our client sooner that they were in a penalty position, but the main basis of the reasonable excuse claim is that our client had good cause to consider that the return had been correctly filed in May 2011.

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By Exector
24th Feb 2012 09:40

This is a structural problem

I do not have faith in the appeals system to remove it as what HMRC are doing is generally strictly within the terms of the statute and the most likely successful grounds of displacing the penalty is by the reasonable excuse route which is what the above post is essentially following. It does not allow considerations of fairness and proportionality in the common appeal case where the defaulter is not actually aware  of the default and so takes no action to remedy it until after the penalties are issued, habitually in a four month block. Inherently therefore there is a monetary advantage in HMRC delaying the issue of penalty notices where the defaulter is unaware of the existing penalty position and is unlikely to remedy it unilaterally.

The legislation should be changed to award an initial fixed, not time based penalty until after the original penalty notice has been issued by HMRC. If not responded to by submission within 30 days of that initial penalty, then some form of daily based delay penalty would then be reasonable and justified. This would provide the incentive for HMRC to issue initial penalties early and for unknowing but accepted defaulters to remedy the situation at an early date, assumimng they chose to do so. No qualms then about further penalties if they do not.

It is extremely hard to win cases simply on the basis of natural justice when the statutory position is clear. One of the first things I was taught in my "previous life" training was  that "there is no principle of equity in taxatiion"! We have moved away a little in recent years from simple judiical decision based on a literal interpretation of the statute to a slightly wider purposive one , which I feel has given Justice Jones the flexibilty of mind to look at the wider picture, but it is by no means a common approach by the tribunals and courts as other decisions in this area have shown. I would rather the appropriate legislation was modified to have a fairer result than rely simply on case law and sentiment. I don't think the concept of Self Assessment should be used as a mantra to impose all of the compliance burdens onto the taxpayer and none on HMRC  (principally for cost reasons of course, no other). They should be shared!

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By pauljohnston
25th Feb 2012 09:42

As others have indicated

it can not be in HMRC's financial interest to continue with the claim that it takes 4 months to issue penalty notices.  The costs of appeals even if unsucessful takes time and costs and if tax is due the cost to the co8untry in not having the money in its cffers earlier is not offset.

But perhaps the real reason is that HMRC is in such a mess with regard to PAYE.  We have just had a letter for one of our employer clients " Mr X left your employment recently and you are expected to issue a P45 or you will be subject to a financial penalty".  Mr X was a casual employee and works on and off code BR.  THe last time he worked was in 2009.

What should of happened is HMRC should have looked at its records and seen no payments to this guy rather than making an incorrect assumption. 

CIS refunds could not be made until October for CIS returns to April 2011 is just one more piece of evidence that HMRC is in a mess.  Considering PAYE is the single biggest source of revenue to the state you would have thought that PAYE  would be sorted out before now.

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By DGL385
02nd Apr 2012 17:12

Late Filling OnLIne of P35 & P24s.

12.00

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I act as a unpaid Agent for a Local Council Grant for a wife to look after a very disabled Husband who is 90% Bed Bond. The Local Council Rules are as the wife lives in the same house as her Husband the Council s Rules state that they cannot pay her direct. That's where I come in I am a old age pensioner age 72. I use the HMRC. CD ROM to calculate her wages each 4 week period  by use of the HMRC CD-ROM which CALCULATER out  PAYE & NI contributions' each 4 weeks ( she is over the retirement age & does not pay any NI.)  it calculates and prints out on a P11 printout what the PAYE & NI is each pay period of 4 weeks. I have paid every PAYE & NI amounts within a week of the 4 weeks pay period on line by the HMRC Web Site using the Government Gateway process using My individual Government Gateway No & have Ref No's of each payment made with times & dates when they were paid on from Santander Billpament dept. I also submitted my end of the year P35 & P14 on line within the time frame allowed. only to be notified some 4 months later that they had not received them. I spoke to the HMRC CD-ROM tech help line only to be told them they did receive them but showing all OOOO amounts which has now been lost in the system.   I was ask to resubmit my end of the year details P35 & P 14 again which I promptly did that week & have prove of by e-mail. @ the telephone call with the HMCR CD-ROM help line they stated that they have been other complaints with the same problem,  As a outcome that they replaced the old CD-ROM & Updated version with a Brand new Basic PAY tools CD-ROM. to try to overcome the problem. I have appealed three times in total against the £400.00 & £100  Totals for late submission of my P35 & P14 for the years 10/11 with rejection each time of my appeal. I therefore ask for a hearing @ HM Courts & Tribunals Service.

I have received a letter back from HM Courts & Tribunals Service. stating their is ongoing appeals  waiting to be heard with HMRC Hok Ltd & UKFITT 433 about similar problems they have had and untilled this cases have been adjudicated on. HMRC have put me appeal on hold.  If anybody would like any paperwork on my case please contact me on my email address

[email protected]

From Mr Derek Leonard

 

PS . The payment setup I do for One person is more like a charity not a profit making business, no profits are made only a very small bit of interest paid by the bank of about £40 - £50 a year which help pay towards Insurance and small items of surgical gloves & Creams.

 

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By brlconsulting
14th Jun 2012 13:32

Money Making Operation

Submitted an FOI request asking how much revenue had been raised re Penatly Notices related to Company Returns.

The figure supplied for 2011 - 2012 is £14.8 million

Assuming that the majority of penalties incurred the full 4 months, which seems to be standard,  that indicates 3.7 million businesses were fined.

I would suggest that contrary to what HMRC maintain, this is a lucrative income stream.

I am currently waiting for the HOK appeal decision to see where m case goes to. We need to keep the pressure up for refunds of excess penalties, which are contrary to natural justice.

Brian Lock

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By Sue Oakley
29th Nov 2012 17:07

HMRC Tribunal hearing 5/12/12

I refused to be linked with the HOK result because I received a fine when I had infact submitted the EOY return and P35.  A glitch in the system sent me the wrong confirmation.  I have been at this since 2009/10 - appeals, more appeals, first tier tribunal, upper tier tribunal and have now been referred back to the first tier for a personal hearing.  I cannot believe that they are per suing  this fine of their making.  I said in a letter in April 2011 'someone has to believe me, I am not telling lies'.  They obviously think I am a liar so I am about to fight my corner again in Birmingham.

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