Preece wins £100 penalty tribunalby
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”.