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Tribunal rejects taxpayer digital confusion

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5th May 2016
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The first tier tribunal (FTT) has rejected a reasonable excuse appeal that could have some potential implications for Making Tax Digital.

The taxpayer in this case, Andrew Halford, submitted his tax return online for the 2013-14 tax year on 30 January 2015 – one day before the deadline.

Halford only paid the associated tax liability on 9 March 2015, however, and as the payment was made more than 30 days after the due date, a penalty of 5% of the tax liability was imposed along with interest.

But in his evidence, Halford argued that he had been misled by an “erroneous message” from HMRC’s website. Halford told the tribunal that, having completed his tax return and having been notified by HMRC’s system that he had a tax liability for the 2013-2014 tax year, he “logged back in again to check” if the tax was due to be paid immediately.

He was “presented with the message ‘You have nothing to pay’” and understood this to mean that the tax liability was “not immediately due”. Halford said he “thought nothing more of it”. Halford mistakenly assumed that the message would be a real time reflection of his tax liability. Instead, it still had to be processed.

Subsequently, Halford received a letter from HMRC a couple of months later stating that the tax liability was due for payment. He received a further letter imposing the penalty. According to Halford, the tax liability was paid late as a result of an “erroneous message” from HMRC’s website and that he “made every reasonable effort” to check whether or not he needed to make payment and that he made payment “as soon as [he] received notification that it was due”.

Under Making Tax Digital, taxpayers will have to go through HMRC’s online systems to fulfil their tax obligations. This could make HMRC’s definition of taxpayer responsibility and ambiguous online warnings somewhat problematic. As AccountingWEB’s tax policy editor Rebecca Cave noted, “The law supposes that the taxpayer should have more knowledge of tax law than they actually do”.

In its evidence, HMRC rejected Halford's argument, stating that “under self assessment, it is the taxpayer’s responsibility to pay the right amount of tax, at the right time and that there is no obligation on the part of HMRC to notify a taxpayer that a tax liability exists before the due date for payment of that tax”.

In her summary, the tribunal judge concurred with HMRC: “The due date for payment for self assessment tax liabilities is set out in statute and readily ascertainable. Statute is clear that it is the taxpayer’s responsibility to comply with such due date and there is no statutory obligation on HMRC to notify a taxpayer of the due date for payment.”

Replies (3)

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By pacta
05th May 2016 16:19

I cannot agree that, to the layman, the due date is "readily ascertainable". In what other area of an individual's life does anyone review legislation to confirm such facts? Never.

I think that is quite a narrow view from the Judge but understand with the lack of statutory basis requiring HMRC to inform of due date.

The common sense view is simply that HMRC could quite easily have either (i) a clear message indicating when tax is due at the end of the SA online process or (ii) a clear message indicating that the balance displayed on the SA account may not be up to date (I think that it now does).

Either way, not a fair result imo.

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Replying to pacta:
By taxbakbristol
10th May 2016 01:44

Tax doesn't have to be taxing....what a load of old RUBBISH!

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By hiu612
10th May 2016 15:22

Should he have known better? well maybe, but what a cracking line of argument, and mustn't it have been difficult to argue in Tribunal that no tax to pay doesn't mean no tax to pay. I think the taxpayer has been unlucky here.

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