Tuesday, 5 June 2018

Tax Penalties May Be Unlawful: Latest Case

Do forgive me for boring you with cases on how you may be able to avoid having to settle tax penalties (see http://www.breakinglaw.co.uk/search/label/tax%20penalties for the sort of agony I have put you through).

And here's the latest case with my abject apologies. In Lennon v Commissioners for Her Majesty's Revenue & Customs [2018] UKFTT 0220 (TC)  the taxpayer had been penalised for failing to put in  tax return on time. He was subject to PAYE but his employer had under collected £321 for one tax year and HMR&C decided it wanted a return from the taxpayer. On the taxpayer's appeal against penalties for the lateness of that return,  the Tax Tribunal judge ruled that- 
  • There can't be a valid penalty unless there has previously been a valid notice from HMR&C to the taxpayer to put in a return.
  • A tax tribunal has jurisdiction on an appeal of this kind to look into the validity of the HMR&C notice.
  • A notice can be given for the purpose of establishing the tax which the taxpayer has to pay for a given tax year.
  • In this case, the notice had not been given for that purpose as HMR&C was fully aware of how much tax had to be paid. It was just the uncollected £321.
  • Because the purpose of requiring the return was invalid, the notice requiring it was invalid and the penalty based on non-compliance with the notice was invalid.
Please forgive me.