HMRC Loses Another Tribunal Case

HMRC acted in an “unconscionable manner” when dealing with a recent late Self Assessment filing penalty, according to Judge Geraint Jones QC.

In the case of Kathleen Lomas v HMRC, Lomas was sent a paper tax return, which she retuned before the deadline of 31 January.

However, she was fined £100 as the deadline for paper returns was 31 October.

Judge Jones said: “The fact that HMRC did not return the paper tax return and insist that the appellant must file online leads me inexorably to the conclusion that it did, by its conduct, waive the requirement for the paper return to be filed by October 31, 2010, or for the appellant to file online by January 31.

“She lost the opportunity to file online within time and thus avoid any penalty. It is not for HMRC to act in such an unconscionable manner. It should, as a matter of good conscience and proper administration, it being a public body that should abide by the highest standards of good administration and fairness, have promptly informed the appellant. It did not do so.

“HMRC argues that the appellant failed to submit her paper tax return by the due date and that penalties are imposed to promote the efficient operation of the tax system, with the responsibility to submit being placed squarely on the shoulders of the taxpayer. That proposition might be acceptable in circumstances where, by its conduct HMRC has not misled the taxpayer or lulled her into believing that she has fulfilled the obligations.

“To ignore the latter aspect of this case would be manifestly unjust. Appeal allowed. The appellant having paid the penalty of £100 already, same must be returned to her, with interest.”

Tax commentator George Bull said: his judge has become scourge of HMRC with good cause. This particular piece of conduct by HMRC seems to date back to a time when they gave every impression of doing whatever they could to maximise penalties charged on taxpayers.”

Ricky Steedman