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Preece wins £100 penalty tribunal

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8th Aug 2012
Freelance journalist
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A man who lost his job has won a four-year battle to overturn a £100 penalty for the late submission of a Self Assessment tax return. Nick Huber reports.

Derek Allen, director of taxation at the Institute of Chartered Accountants of Scotland, wrote in a blog that HMRC should “hang its head in shame” over a dispute which showed the taxman’s capacity for “maladministration and lack of judgment.”

The first-tier tribunal case (David Preece and the commissioners for HMRC, TC01887) focused on whether a £100 penalty for a late Self Assessment return could be collected.

When Preece was made redundant in March 2008 he asked HMRC to check whether his employer had deducted the correct tax from his redundancy pay as he felt he had paid too much.

HMRC told Preece that he owed £2,037 in tax. Preece accepted HMRC’s calculation and asked to repay this sum over a two-year period by adjusting his tax code.

However, in January 2011 Preece received a letter from HMRC demanding payment of the £2,037 by 25 February 2011. He wrote in reply that he was worried and upset by this letter because he had been told that the underpayment was to be collected using his coding notice.

HMRC treated this letter as a complaint and after reviewing the file recognised that far from owing HMRC anything, Preece had overpaid his tax in 2008/09 and was in fact owed £1,836.57 by HMRC. The review also indicated that by 2009/10 Preece might have become entitled to age-related personal allowances and asked him to complete a 2009/10 tax return, which would be sent to him.

In April 2011 Preece received a Self Assessment return for 2010/11 which he submitted online promptly. By June 2011, Preece had received a penalty notice for £100 for his failure to submit a 2009/10 Self Assessment tax return. He explained he had never received that return.

The tribunal ruled that on the balance of probabilities HMRC issued the wrong paper return for 2010/11 instead of the return they wished, which was for 2009/10.

In her ruling, Anne Redston, presiding member at the first-tier tribunal, said that Preece’s evidence showed him to be a “transparently honest person” who had consistently tried to pay the right amount of tax.

Although Redston said that did not have any jurisdiction over Preece’s complaints about the way his tax affairs have been handled, she advised him on how to pursue a complaint for compensation to the “revenue adjudicator”.

An HMRC spokesperson told AccountingWEB: “For legal reasons we can't comment in detail on specific cases but when the standard of service we provide falls below that to which the taxpayer is entitled to expect we urgently review the case and apologise. We are determined to learn lessons when we make mistakes.

“We have put in to place changes for the new SA penalties this year to ensure only appropriate cases go to tribunal in the future”.

Replies (15)

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By Peter Tucker
08th Aug 2012 22:22

An HMRC spokesperson ....

Also suggested that

Jelly stick to the ceilingFairies live at the bottom of gardensThe tooth fairy is real

They did not say that there is now no one responsible for anything within the HMRC organisation, from senior management through to porters.

Richard Bacon MP recently asked Mr M Shipp, senior manager in HMRC, the following question:

“If all PAYE electronic Data has to pass HMRC’s own validation before it is accepted, how can HMRC claim there is any Dirty Data passed from Employers?”

The answer was “er well” and “RTI”

Ms Homer and Mr Shipp got away with this.

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By [email protected]
10th Aug 2012 12:09

How has this battle taken four years, did he not receive this penalty in June 2011?

"A man who lost his job has won a four-year battle to overturn a £100 penalty for the late submission of a Self Assessment tax return.""

"By June 2011, Preece had received a penalty notice for £100"

 

 

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Replying to MonikaAg:
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By Paula Sparrow
10th Aug 2012 14:03

The story begins in March 2008

<a href="mailto:[email protected]">[email protected]</a> wrote:

How has this battle taken four years, did he not receive this penalty in June 2011?

"A man who lost his job has won a four-year battle to overturn a £100 penalty for the late submission of a Self Assessment tax return.""

"By June 2011, Preece had received a penalty notice for £100"

 

 

 

The taxpayer thought he had paid too much tax on his redundancy payment which he received in April 2008.  HMRC did their usual foul up and told him he had £2k to pay.  He has been trying to sort it out ever since, with just [***] up after [***] up making it ever messier.  The Baillie report is well worth a read

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By Roland St Clere-Smithe
10th Aug 2012 12:24

It's shameful

How many times have we heard "...we are determined to learn lessons when we make mistakes." and "... we apologise", not only from HMR & C but all the other state and private instututions who have behaved so badly.

Apologies are no longer good enough. Those responsible should loose their jobs and pensions. No doubt their friends at Goldman Sachs and Vodafone will see them okay.

 

 

 

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By Robbas
10th Aug 2012 12:45

Consequences

Until HMRC employees are made responsible for their actions these situations will continue as in most other civil service departments. The costs of these cases should come out of the salaries and pensions budgets, that way the people responsible will have a financial consequence. if its not their money they don't care.

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Replying to cheekychappy:
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By Paula Sparrow
10th Aug 2012 14:12

Training

Robbas wrote:

Until HMRC employees are made responsible for their actions these situations will continue as in most other civil service departments. The costs of these cases should come out of the salaries and pensions budgets, that way the people responsible will have a financial consequence. if its not their money they don't care.

I believe we are seeing the result of the cut backs in training coming to fruition.  Staff no longer have the knowledge to grasp the implication of their actions.  They are given a script to work to and are generally not permitted to stray outside of that script.  Some work blindly on exactly in accordance with instructions, others, perhaps more experienced, can see the car crash coming, but their hands are tied behind their backs leaving them unable to apply the brakes.

Only this morning I had a conversation with a Revenue employee about an enquiry notice into a 2010 Tax Return.  They were querying why pension income reported was £55k whilst the P14s they have received total £48k.  If anyone had read the information in the white space of the Return the pensions are broken down on there - AS REQUIRED.  However, this muppet could not grasp the concept that we had already supplied the information on the return and if they had done their job properly the enquiry need not have been raised.  He could only focus on the standard response that the P14s did not add up to the same as the pension declared on the return and kept to his guns. 

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By weaversmiths
10th Aug 2012 14:23

Irresponsibility

If HMRC went back to the caseworker pattern of working instead of "off the pile" (via a computer) the person responsible could be held to account.  As it stands no one cares a flying fish what happens.  Lack of responsibility abounds at all levels.

 

TheAncientOne

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By Springfield
10th Aug 2012 14:26

Out of Proportion

What worries me about this shambles is that HMR&C were happy to pursue this case as far as they could in an attempt to enforce just £100.  At no stage of the process did anyone at HMR&C seemed capable or empowered to look at the correspondence and ask "Why are we doing this?" 

 

 

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Replying to Portia Nina Levin:
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By Paula Sparrow
10th Aug 2012 14:31

context

Springfield wrote:

What worries me about this shambles is that HMR&C were happy to pursue this case as far as they could in an attempt to enforce just £100.  At no stage of the process did anyone at HMR&C seemed capable or empowered to look at the correspondence and ask "Why are we doing this?" 

 

 

Yes, £100 is a very small sum to bother with a tribunal, but if you multiply that by the several thousand late returns each year it makes more sense.  The more cases they can get through the tribunals, the more likely people are to just pay up.  Once HMRC have made the "no reasonable excuse" decision, they cannot then be seen to say don't worry because we can't be bothered to argue over £100

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Replying to mr. mischief:
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By Springfield
10th Aug 2012 15:03

Agree with the "£100 times

Agree with the "£100 times several thousand" point.  However, any right-minded person reading the Ballie report will have no trouble distinguishing between a tax-payer who has tried his utmost to sort this out in a reasonable way and a dysfunctional bullying and apparently unaccountable organisation who made error after error in this case, the final error being to pursue this into the public domain where they now look stupid - all for £100.

It's not that a win for HMR&C would have strengthened their hand on late returns, it's a case that - once the facts were set out - they were never going to win and the fact it was over £100 makes it absurd.

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By Nick Graves
10th Aug 2012 15:06

Typical case

I cannot see anything out of the ordinary about it; about the usual treatment for an average taxpayer.

HMRC seems to think so too; it's always everyone's fault but theirs.

 

 

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By The Black Knight
10th Aug 2012 17:11

And in the meantime?

£100K of tax evasion slipped through the net ?

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By David Gordon FCCA
10th Aug 2012 17:15

HMRC apparatchiks

The sad thing is there are still live intelligent persons working for HMRC, but they are being overwhelmed by undertrained and incompetent ninnies.

Wednesday last was a revelation..

I had a client whose CIS refund was well overdue, and a "Muppet" had sent out out another irrelevant letter/ form.

I called into the CIS help line, and to my delight got an HMRC officer who understood tax, who understood that the refund was not just a number, but was x weeks rent and groceries. . She saw the problem, fixed it, and this afternoon the refund hit my practice client's bank account.

It just demonstrates that Muppetry is not an incurable HMRC disease.

 

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Replying to DJKL:
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By The Black Knight
10th Aug 2012 17:26

Hunt on

David Gordon FCCA wrote:

I called into the CIS help line, and to my delight got an HMRC officer who understood tax, who understood that the refund was not just a number, but was x weeks rent and groceries. . She saw the problem, fixed it, and this afternoon the refund hit my practice client's bank account.

It just demonstrates that Muppetry is not an incurable HMRC disease.

The hunt is now on to find this individual before it spreads and causes any more work.

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By mikewhit
16th Aug 2012 13:09

Let's see how much you've learnt then

We are determined to learn lessons when we make mistakes.

Further to an earlier post, let's make it a legal requirement when any public body makes this statement, that it is required to publish a list of the avoidable mistakes that occurred in the relevant incident, and a corresponding list of the measures or practices now in place to counter each item.

Additionally the Office of Learned Lessons must be notified to track implementation and any changes to the measures and procedures.

Just then Alice woke up. It had all been a dream.

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