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Tribunal slates HMRC for poor service to taxpayer

13th Apr 2018
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Andy Keates examines another case in which a judge criticised HMRC for the poor service it provided to a taxpayer. In this case, one who was asked to file a tax return for the first time. 

In January I wrote about the Goldsmith case which showed HMRC in a very poor light for its inappropriate use of self assessment for a taxpayer whose tax affairs should have remained firmly within PAYE. The case of Marc Capuano (TC06371), heard by first tier tribunal (FTT), takes us into similar territory.


Capuano had three part-time jobs in 2011/12, and his full personal allowance was allocated against each under PAYE. This inevitably resulted in an underpayment of £349.20. Why HMRC didn’t code this out, nobody knows. All its file showed was that HMRC issued him with a self assessment tax return in June 2014, to his last known address.

Capuano filed the tax return in March 2016, by which time penalties of £1,600 had been clocked up under FA 2009, Sch 55. His appeal was against those penalties.

Capuano’s excuse

Capuano had moved around a lot during the relevant period: between October 2011 and December 2015 the judge noted four separate addresses. One aspect of Capuano’s reasonable excuse claim against the late filing penalties was that he did not receive correspondence from HMRC.

More interestingly, he also asserted that – prior to the issue of the TMA 1970 s8 notice to make a self assessment – he had tried to telephone HMRC in order to sort out his tax underpayment. In his own words, after “countless phone calls” he was “messed about and not told how to rectify the situation”.

The final point raised by Capuano, which the judge found particularly telling, was that he works for an employer, has never been self-employed and has never had to deal with paying his own tax, as it is deducted by the employer.


The judge said she needed to decide whether Capuano was a reasonable taxpayer who has taken appropriate steps to ensure that he filed his tax return timeously. The points she made were:

  • He was a first-time filer whose awareness of what is entailed in filing a tax return was limited, if not non-existent.
  • He had been brought into the SA regime somewhat unnecessarily because of the PAYE underpayment of £349.20. If alternative ways to settle this had been offered to him, he would no doubt have paid.
  • He had repeatedly tried getting help from HMRC to find out what was required of him to rectify the situation. He had little success in being able to obtain the necessary information or assistance.

The judge also raised the wider issue of HMRC’s customer service during the period in question, and made these points:

  • In December 2012, the UK National Audit Office raised issues about the poor customer service delivery by HMRC.
  • In March 2013, the House of Commons Public Accounts Select Committee criticised HMRC for its ‘unambitious and woefully inadequate’ response to their report.
  • It was reported that only 50% of the calls to HMRC were answered in the period between April and June 2015. The performance was described as ‘staggeringly bad’ by MPs in June 2015.
  • In June 2015, the chief executive of HMRC had offered apologies to ‘all those customers who have struggled to get through to us’.
  • The Public Accounts Committee criticised HMRC for ‘failing UK taxpayers’ in 2015. Capuano would seem to be one of the taxpayers who had been failed by HMRC in this respect.

Based on those background facts, the judge had no hesitation in deciding that HMRC could have handled this better. She pointed out that if taxpayers are HMRC’s “customers”, they are entitled to a service, which in this instance had singularly not been provided. The appeal was upheld, and the penalties were dismissed.


Yet again, HMRC has been criticised for using SA to put right PAYE problems. Will the new simple assessment system prevent cases such as this happening in future? We must hope so.

As for the problems of getting through to someone at HMRC who can actually help or advise a taxpayer, the service is certainly better now than a few years ago but it is important that standards do not slip again.

Replies (3)

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By johnjenkins
16th Apr 2018 10:25

It is surely time that the old addage of "if a tax return is issued it has to be completed" should be updated to cater for PAYE instances.

Thanks (0)
16th Apr 2018 13:25

Agreed, we have seen many instances where HMRC issue a notice to file and often to incorrect addresses (even though the correct address is held on the PAYE system - apparently the two systems don't talk to each other). HMRC then use bullying tactics against taxpayers who clearly have no clue what this is all about, having never been in self-assessment before.

Let's hope HMRC have listened this time.

Thanks (4)
Replying to JL:
By cfield
17th Apr 2018 20:47

I had a case like this last year which went all the way to Tribunal. Tax returns and penalty notices were sent to an old address even though they had the correct address on his PAYE records. They blamed him for not telling them his new address. At no time was he ever self-employed and he had no investment income.

I quoted the Alexander Revell decision and the judge upheld our case immediately, but it took another 6 months and reams of correspondence before they would cancel the interest, which was outside the jurisdiction of the Tribunal.

In all that time, my client was hounded by debt collectors even though it was under appeal and even after we'd won the case. Their excuse for this was that someone had died.

After all that, they offered just £300 compensation for worry and distress, although they did reimburse all my fees. It was a long hard slog, but it just goes to show that if you have a reasonable case and stand up to these people, you usually get justice in the end.

Thanks (4)