MAY/JUNE 'LAW WATCH' IS OUT

 In my latest free video, I cover

• why some will remain seated when the judge enters court and without fear of being potted for contempt;
• the charges now being made by the Financial  Ombudsman Service and how small businesses as well as consumers can go to the Ombudsman for help;
• the increased interest and penalties for failing to pay your taxes on time; and
• when your executors cannot agree whether your body should be buried or cremated.

Go on, treat yourself to a click below.

LAW WATCH - FROM STEPHEN GOLD

Will this law never stop? No. And just to prove it, here is another free video. This one is about why you may be claiming too little for personal injury damages, avoiding the 'fixed recoverable costs' regime for civil proceedings kicking off on 01 October 2023 (although note that the regime only applies to personal injury cases where the right of action accrues on or after 01 October 2023) and why the taxman's penalty may not be wholly or partly payable. Click below.

Taxpayer Win in High Income Child Benefit Charge Case

If you or your partner receive child benefit and your annual adjusted net income is over £50,000 then part of that child benefit will be taxable. If you reach £60,000 then the whole of the benefit will be taxable. That's been the score since 7 January 2013 and you have to disclose the benefit to the taxman and, register for self-assessment, if not already registered, sending in a tax return. Failure to do so will land you with a bill for the tax you should have paid, interest on it - and PENALTIES!!!!

That's what happened in a case just before the first-tier tribunal of the tax chamber.*  There, the taxpayer's partner had received child benefit for the tax years 2012/13 through to 2015/16. The taxpayer had not disclosed the benefit to the taxman because he claimed he did not know of his obligation to do so. In fact, some of the benefit would have been taxable. He did not find out about his obligation until the taxman wrote to him in August 2018 telling him about the the high income charge. He then made full disclosure and paid up everything required except for a penalty of £296. 

The tribunal has cancelled the penalty. The taxpayer, a lorry driver, had a reasonable excuse for not disclosing the benefit because he had not known that he was obliged to do so. There had been a number of cases where tribunals had decided that ignorance of the law could be a reasonable excuse. It would depend on the nature of the law in question and the characteristics of the taxpayer. HMRC argued that it was not obliged to inform taxpayers of  a change in the law but, nevertheless, there had been national campaign about the this scheme. The tribunal concluded that the taxpayer was completely unaware of the new legislation and noted that there had been no targeted campaign to write to all tax payers earning over £50,000 when it had come in.

If you are late in appealing a penalty in your case, you can have  a go at asking the tribunal to extend your time for doing so, explaining why an extension is needed.

* Kevin Brazier v The Commissioners for Her Majesty's Revenue and Customs [2020] UKTT 00185 (TC)

Late Tax Return: Escaping Penalty

The deadline for putting in your tax return is 31 January 2020. You won't make it? Penalty, interest, grief?

For the Great Escape, see http://www.breakinglaw.co.uk/search/label/tax%20penalties

Sleep tight.

Escaping Taxman's Penalty For Non-Payment

The taxman has won an appeal case.* You may think I have lost my marbles in telling you about it. My marbles are intact. I am telling you about it because it highlights how the defence of 'reasonable excuse' can get you off having to pay tax penalties not only for failing to get your return in on time but  for failing to pay on time the tax you have been assessed to pay. And by the way, yesterday 31 January 2019 was the deadline for settling your self-employed tax assessment. What do you mean, you forgot?!

Leading barrister Timothy Raggatt QC was stung for late payment penalties relating to two tax years which totalled nearly £13,500. He appealed to the first tier tribunal of the tax chamber (as one does) and lost. So he appealed again to the upper tribunal (as one does) and has just lost. He was represented by Timothy Raggatt QC (as one would be as it tends to keep legal fees down). 

Mr Raggatt's argument was that he had a 'reasonable excuse' for late payment. This, he said, was that events out of his control had prevented him from paying on time. He principally relied on the substantial reduction in his income from the cuts in the legal aid budget and his bank's refusal to increase his overdraft facility. 

Now, to succeed with a defence of 'reasonable excuse' you have to show that you exercised reasonable foresight and due diligence and a proper regard to the fact that the tax liabilities concerned would become due on particular dates. The Finance Act 2009  (go to paragraph 16 of the 56th schedule if you must and you can bear it) states that an insufficiency of funds is not a 'reasonable excuse' unless it is attributable to events outside the taxpayer's (or tax non-payer's!) control and that if you rely on any other person to do something, you must have taken reasonable care to avoid their failure to do so. 

Both tribunals had considerable sympathy for Mr Raggatt's predicament (a fat lot of use that was!) but, as it was put on this latest appeal, he could have done more to have avoided that position.

What was made clear by the upper tribunal - and this may be of help to you- is that the principles relating to 'reasonable excuse' are the same in late return penalty and late payment penalty cases. There was no legal requirement on the part of a self-employed professional person to reserve for their  tax liabilities but a person with such an episodic life as Mr Raggatt would be well advised to take reasonable steps to make some provision for tax liabilities or to ensure that they had appropriate bank facilities to meet their expected tax liabilities if they subsequently wished to plead a 'reasonable excuse'.  Taking such reasonable steps might not end up enabling a taxpayer to deal with unforeseen events but if it appeared they had done all that could be reasonably expected of someone in their position then the defence of 'reasonable excuse' might be a winner.

*Raggatt v Commissioners for HMR&C [2018] UKUT 412 (TCC)

Taxman Loses Another Case

Here we go again. Last week HMRC lost a further appeal case before the tax chamber's first tier tribunal.

In Pantelli v Commissioners for Her Majesty's Revenue & Customs [2019] 1 WLUK 42 Mr George Pantelli was appealing against penalties imposed for the late filing of his self-assessment tax returns for two years. But before the obligation to file a self-assessment return can legally arise, the taxpayer must be sent a notice by the Revenue requiring that to be done (section 8 of the Taxes Management Act 1970). No notice, no penalty.

Mr Pantelli claimed that he had not been sent the requisite notice for either tax year. In order to defeat that argument, the Revenue had to prove that it was more probable than not that it gave the notice to him. Adequate evidence of this, held the tribunal judge, was a necessity and not a luxury. However, the Revenue failed in this appeal to produce any witness evidence that the notice had been given. That being so, Mr Pantelli's appeal succeeded and the penalties were quashed.

For other recent decisions on penalties and challenging the Revenue, see  http://www.breakinglaw.co.uk/search/label/tax%20appeals

Tax Penalties Quashed: Latest Appeal Cases

They tell me that 31 January 2019 is near. Penalty time if you don't get your online tax return in by then. You can appeal against all sorts of tax penalties which should not have been imposed. The appeal success rate looks to be pretty reasonable. You will find details of successes at http://www.breakinglaw.co.uk/search/label/tax%20penalties

Here are two of the latest taxpayer wins.

In Redman v Commissioners for HMRC Appeal number TC/2017/07240 the first-tier tribunal of the tax chamber cancelled penalties of £97,821 for two tax years which had stunned an evangelical Christian who earns his living as a singer/songwriter and musician and for a period of time had been non-resident here while working in the USA. When his accountant came to file his late tax returns for two years subsequent to his return to the UK,  the accountant found he was unable to do so because Mr Redman had been removed from the self-employed system. Trouble is that HMRC had failed to notify that fact to him or his accountant. Nevertheless, HMRC asserted that Mr Redman had breached section 7 of the Taxes Management Act 1970 by deliberately not giving notice of his liability to be charged up for tax in relation to those two years. 

The Tribunal decided that the failure to notify could not have been deliberate because neither Mr Redman nor his accountant had been notified that Mr Redman had been taken out of the self-employed system. It also decided that was a reasonable excuse for non-notification. So, no deliberate default and no carelessness.

Over to Advantage Business Finance Ltd v Commissioners for HMRC [2019] UKFTT 30 (TC) where daily penalties of £900 were cancelled by the Tribunal for a late Annual Tax on Enveloped Dwellings return (pretty obscure, I know). The reason? The law required HMRC to notify the taxpayer of the date from which the penalty was payable. It did so but only after the end of the penalty period. Too late.

Happy Returns to you!

Revenue Arguments Against Penalty Quashing Condemned by Tribunal

A bit more law for you on how HMRC tax penalties may be overcome. And if you like what you read then grab http://www.breakinglaw.co.uk/2018/06/tax-penalties-may-be-unlawful-latest.html and you might just want to buy my book at the same time so that I can afford to pay my tax bill due at the end of this month).

You thought that ignorance of the law was no defence, didn't you? Well it sort of might be when we come to whether you have a reasonable excuse for not paying tax penalties. That was made clear by the Upper Tribunal of the Tax and Chancery Chamber (it wasn't my idea to call them that!) in Perrin v Commissioners for HMRC [2018] UKUT 156 (TC). If the excuse was objectively reasonable then it might lead to penalties being quashed. The Tribunal said that some requirements of the law were well-known, simple and straightforward but others were less so. It would be a matter of judgment for tax tribunals in each case whether it was objectively reasonable for a particular taxpayer to have been ignorant of the requirement in question and for how long. 

HMRC was also condemned for its habit of putting forward arguments that an excuse had to be based on some unforeseeable or inescapable event or an unexpected or unusual event. That was not the law. In future cases where these arguments were trotted out, HMRC might be ordered to pay the costs of a taxpayer who had successfully appealed against penalties.

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.

Tax Trouble Medicine

Oh dear, you didn't get your tax return on time, did you? And your friends at Her Majesty's Revenue and Customs have started to talk about penalties and more penalties and more, more penalties and you haven't got the cash to pay the tax you should have paid by 31 January 2018. Don't stick your head in the sand. Go to http://www.breakinglaw.co.uk/search/label/tax%20penalties  It might just help you.

If you decide to appeal against the imposition of a tax penalty or assessment then now you can do it online so that it's just as pleasurable as buying from Amazon or cursing the Revenue on Facebook.  Go to https://www.gov.uk/government/news/appeal-your-tax-bill-online immediately after you have finished your egg and chips this evening. And almost as exciting, from this Spring a trial begins of video hearings of appeals to the tax tribunal. You may have the opportunity to participate in your appeal from the comfort of your kitchen or the table by the from door of your local Cafe Nero. Do remember, though, to dress with relative smartness - nothing too expensive or they may think you can pay the penalties yesterday - and don't hit your head on the web cam when you bow to the judge.

Tax Penalty Invalidated Because Imposed by Computer

A company was late in filing its tax return. Result? You guessed right. It was fined £100. It appealed against the penalty to the first-tier tax tribunal. 

The tribunal judge wanted to be satisfied that the the Revenue's determination to impose a penalty had been validly made. It was for the revenue to prove this was so. The Taxes Management Act 1970 section 100(1) says that..."an officer of the Board authorised by the Board ...may make a determination imposing a penalty under any provision of the Taxes Act and setting it at such amount as, in his opinion, is correct or appropriate." 

From such documents as were produced to him in the case, the tribunal judge concluded that the penalty notice had been issued automatically by a computer as had been the covering letter sent out with it to the company. It appeared that the Revenue's computer was programmed to run checks shortly after the due date for filing a return that was entered into it. If it found no entry for the return being received, the computer caused an entry to be recorded that a determination was made for the imposition of a penalty and the computer issued a notice to this effect. All without any decision making by an officer of the Revenue. 

In a judgment just published, the judge ruled that the requirement in section 100(1) of the 1970 Act mentioned above was for a flesh and blood human being who is an officer of the Revenue to decide to impose the penalty and then give instructions in relation to it which could be executed by a computer.

The judge quashed the penalty but in doing so made the point that his decision was limited to the late company tax return penalty which was the subject of the appeal and should not be taken to apply to other penalties for different taxes under schedules 55 and 56 of the Finance Act 2009. Nevertheless, it is an argument which may well be run in cases involving other taxes but there different statutory wording may apply. Two other matters. The decision in the company's case was not an upper tribunal decision or higher and the Revenue did not address the issue of the determination's validity or engage in the appeal in a very active way. On another day, it may well have much more to say which is relevant.

If you are aggrieved by a penalty, you might ask the Revenue who decided to impose it and,if not a fleshed blood human being, why not.

The company's case was Khan Properties Ltd v Commissioners for HMR&C [2017] UKFTT 0830 (TC)

£91K LATE PAYMENT TAX PENALTY QUASHED

A tax penalty of just over £91,000 has just been quashed by the tax tribunal in Pearson v HMRC [2017] UKFTT 0780 (TC). It was capital gains tax for a cool £1,833,000 that CEO Mark Pearson had been due to pay on the sale of company shares. That tax bill should have been settled on 31 January 2016 but Mr Pearson was around six months late. He claimed that he paid as soon as his financial circumstances permitted. But did that afford him a get-out?

The law for late payment of most taxes (this does not include VAT) is contained in the Finance Act 2009 at schedule 56 sub-paragraph 16(2). Better than War & Peace but not a scratch on Noddy Goes to Toyland. The tribunal judge ruled  that the test to be applied to whether or not Mr Pearson could escape his penalty - and it was a different test to the one the parties' representatives were suggesting - was this. Was the payment late due to an insufficiency of funds and, if so, did that insufficiency arise by reason of events which were outside his control? If the answer was 'yes' to each then Mr Pearson would have a reasonable excuse - and so will you if in a similar situation. The judge was satisfied that he could give that 'yes' answer to both questions and so the penalty disappears. 

The judge did say that Mr Pearson might have avoided the penalty being imposed in the first place if he had kept the Revenue better informed about his difficulties in the run up to the deadline for payment. The Revenue, he thought. might have reacted a little more sympathetically if that had happened. Mr Pearson appeared to accept that he was at fault in this respect.

Taxpayers Win On Penalties

Two more taxpayers have defeated HM Revenue & Customers over penalties imposed for late tax returns having persuaded the tax tribunal in each case that they had a reasonable excuse. See http://www.breakinglaw.co.uk/search/label/tax%20penalties for what is required to prove you had a reasonable excuse and for previous cases on the topic.

In Robert Morris v Commissioners for HMR&C [2017] UKFTT 0749 (TC)  Mr Morris who had been caned for penalties totalling £2,900 in respect of two separate tax years, had completed those returns for each year and before the deadline. When he had done the same in a previous year, the website had generated a receipt and a long reference number. But for these two later years, no receipt and no reference number appeared. Instead, said Mr Morris, he had each time received an on screen message on a very basic web page saying either "Thank you for your submission" or 'Submission complete'" He treated that as good enough and thought he had done all that was required of him. 

The Revenue's representative at the tribunal could not say that what Mr Morris had claimed was incapable of happening and it put forward no evidence that it was technically impossible or something that was unlikely. The tribunal accepted that Mr Morris was telling the truth and so decided that he had  are reasonable excuse for no returns for those years having apparently been received by the Revenue when he said he had sent them.

And in Roderick Northam v Commissioners for HMR&C [2017] UKFTT 706 (TC) Mr Northam had not been informed by his accountants that, although he had signed his return before the deadline, they were not proposing to submit it in time because they required further information. He had taken reasonable care to ensure that his return was in on time.  

Revenue Goes Overboard on Alleged £4 Mistake: Penalties Quashed

Tabrez Akhtar was a partner with another person in a newsagents and post office. He had to get the partnership tax return in by 31 October 2015. His accountant posted it first class on 31 October 2015. HMR&C (the Revenue) didn't log it as received until ten days later. Then nearly three months later they sent it back. Why? Because they claimed there had been an arithmetical error in that expenses had been overstated by £4. The tax consequence of this alleged error would have been the grand sum of less than £1 per partner. The return was redelivered to the Revenue by the accountant who disputed any arithmetical error. The Revenue imposed on Mr Akhtar a penalty of £100 because they claimed the return had not been in by 31 October plus a daily penalty totalling £560.

Mr Akhtar appealed against the penalties to the First-Tier Tribunal, Tax Chamber.* The penalties were recently quashed in their entirety. The Revenue had gone wrong in

• suggesting that the return had not been received by the 31 October, the Tribunal accepting that it was posted when the accountant said and so, effectively, the Revenue had sat on it.
• charging daily penalties on the basis that the return was not back in their hands until the accountant redelivered it when it was only out of their hands because they had chosen to send it back to the accountant.
• overlooking a statutory provision ( Taxes Management Act 1970 section  12ABB(1)) which allows the Revenue to correct "obvious errors or omissions in the return (whether errors of principle arithmetical mistakes or otherwise.)'
• giving misleading information to Mr Akhtar (and they are frequently criticised for this) about what it would take to get a penalty quashed on the ground that there was a reasonable excuse  ** for what had gone wrong.

I reckon that's enough. Incidentally, remember that if you want to submit your return by post and not on-line then you must do so by 31 October. Also, it's now possible to put in a tax appeal on-line (see https://www.gov.uk/tax-tribunal ).

* The case was Tabrez Akhtar trading as Crawley News and Post Office v Commissioners for Her Majesty's Revenue & Customs [2017] UKFTT 0651 (TC)
** A reasonable excuse is one which is genuine and objectively reasonable when you take into account the circumstances and attributes of the actual taxpayer.

Revenue Loses over the Returned Return

Again and again, we are seeing the Tax Tribunal (First-Tier Tribunal, Tax Chamber, is its formal and posh title) taking a strict line in what the Revenue has to prove before a penalty imposed on a taxpayer will be upheld on appeal (see http://www.breakinglaw.co.uk/search/label/tax%20penalties ). 

And it has happened yet again as we see in the Tribunal's decision in Pidgeon v HM Revenue & Customs [2017] UKFTT 0438 (TC). Here, the taxpayer was appealing against penalties amounting to £1,500 for putting in a late return.  He did put in a return in November or December 2012. But the Revenue maintained it was unsatisfactory and sent it back to him. A second return was submitted in January 2014 which the Revenue said was satisfactory. The penalties related to the period which elapsed between the Revenue's receipt of the two returns. 

The Revenue cannot chuck back a return at a whim. To justifiably reject, the omissions from it must be so serious as to mean that in reality the document does not amount to a return at all. If you signed and dated the return form but failed to complete any other detail then, in my book, you could not seriously argue that you had sent set in your tax return. If you could there would be a lot of happier folk around.  Whether the document amounted in reality to a return, held the Tribunal, was a matter of fact and degree.

So what was wrong with the taxpayer's first return which had started off the penalties? It was for the Revenue to say but it had failed to do so. What is more, it had failed to produce a copy of the document to the Tribunal. The mere fact that the Revenue had rejected it was not sufficient for the Tribunal to conclude that it was not up to the job. 

The penalties in issue were quashed.

Revenue Slips Up

Here's another one, just like the other ones! See http://www.breakinglaw.co.uk  In a decision just published by the First-Tier Tribunal Tax Chamber *  the taxpayer was told by the Revenue that he was under investigation. After two meetings with him, the Revenue claimed to have sent him a notice to produce information and documents. When there was no response, the Revenue imposed a £300 penalty on him. The taxpayer had never acknowledged the notice or given any indication that he was aware of it despite subsequently writing to the Revenue. The taxpayer appealed against the notice.

The appeal was successful and the penalty quashed. The Revenue had not proved that the notice had been sent and received. Often receipt will be presumed where there is evidence of posting. But the Revenue had failed to prove either that they had posted the notice or that the taxpayer had received it.  Had they proved these facts, the penalty would still have been quashed because the notice had been so poorly drafted that, if received by the taxpayer, he would not have known precisely what was being required of him. The notice also proceeded on the erroneous basis that the taxpayer could be expected to produce documents or information held by third parties including companies of which he is or was a director. Those documents and that information were the property of the companies, nobody else.

I'll leave it there. I've got to get my 2016/17 return completed. Don't want to be late.

* The case is Anstock v HMR&C [2017] UKFTT 307 (TC)

Taxpayers Victorious

I realise that it was only the other week that you had your handkerchiefs out for the tax man (see http://www.breakinglaw.co.uk/search/label/tax%20penalties). Bad news. You need them out again. Tissues will do. 

In a series of more appeals to the First-Tier Tribunal of the Tax Chamber, penalties have been cancelled on the grounds that the taxpayer had a reasonable excuse fior being late doing what had been required of them. Many taxpayers lose appeals  but in two of the successful appeals we will have a look at, the Tribunal was mainly on the taxpayer's side.

In Hindocha v HMR&C [2017] UKFTT 0373 (TC) the Revenue accepted that serious mental illness could be enough to excuse lateness but it went on to argue that where the illness was an ongoing condition the taxpayer should make arrangements for sending in their tax return on time. The Tribunal decided that the taxpayer had suffered from a serious mental  illness which had been ongoing for four years in the form of depression, anxiety and panic attacks. And it went on to decide that it had affected the taxpayer in such a way that he had been unable to arrange for somebody else to get his returns in for him. He had found it impossible to get his menial day to day activities sorted, let alone his finances and taxes. He won his appeal and penalties totalling nearly £1,500 were quashed.

The taxpayer secured the cancellation of a £400 penalty but suffered the the upholding of a £100 penalty in Islam trading as Zainub Takeaway v HMR&C [2017] UKFTT 0337 (TC) so his appeal was well worth the trouble. His tax return went in more than three months late. The Revenue's practice is to penalise on a daily basis if a return is more than three months late. That's where the £400 came in. However, the Revenue came a cropper because it failed to establish that the notice of this penalty it sent out to the taxpayer had specified the date from which it was payable. The £100 stood as although the taxpayer did not speak very good English and his understanding of written English was poor, he knew of his responsibilities. He had engaged an accountant to help him in the previous year but failed to do so for the year in issue. He did not have a reasonable excuse for his default.

PS The Waitrose carpark clock was five minutes late yesterday! See 

http://www.breakinglaw.co.uk

Handkerchiefs Out: Tax Man Loses

You are penalised by HM Revenue and Customs - that's the grand title behind which the tax man (or woman, of course) hides - for a late return or whatever and you feel like crying, screaming or eating from a mountain of jam doughnuts until your belly explodes. 

There are alternatives. You could ask HMR&C to cancel the penalty because you had a reasonable excuse for your transgression or otherwise to wipe out or reduce the penalty because of special circumstances. They have the power to do this. And you can appeal to the tax tribunal. 

Proving a reasonable excuse is no walkover: for example, see -http://www.breakinglaw.co.uk/search/label/tax%20penalties  But the taxpayer in the tribunal case of McDonald v Commissioners for HMR&C [2017] UKFTT 0265 (TC) has just done it despite opposition from you know who. The deadline for an on line return to go in came - and went- on 31 January 2012. Penalty of £100. Still no return within the following three months. Penalty of £10 PER DAY!!! Still no return within six months of the original deadline. Penalty of £300. After £1,300 had been clocked up in penalties, the return was lodged on 17 September 2012. 

The tribunal found that the taxpayer had gone through a prolonged period of difficulty which was traumatic for her. It involved her running her own self-employed business, looking after her own home, looking after her ailing parents and their home, attending to her parents' personal needs and, for a time, driving her father to visit her mother in various hospitals twice a day. This would have been physically and mentally exhausting for her. She then suffered the loss of her parents in April and September 2010. After their deaths she had had to deal with their personal effects and financial affairs. She then continued to work beyond retirement age and one reason was that she was conscious of the need to sort out her tax affairs with the help of her accountant.

HMR&C submitted that there was no reasonable excuse for the delay and no special circumstances for any reduction. They claimed that anyone's serious illness could only be taken into account if it meant that the taxpayer was incapacitated from dealing with their own affairs for the whole period from the return deadline until when the return ultimately went in.

The tribunal disagreed. The taxpayer had  a reasonable excuse for the delay and, anyway if she had not had a reasonable excuse, the tribunal would  have reduced the penalties to nil on the ground of spacial circumstances. A resounding victory although the decision could easily have gone the other way with a different tribunal.

If this helps you escape a penalty - and you can always quote the case to HMR&C when seeking an escape - then perhaps you could buy a copy of Breaking Law. There are lots of goodies in it, I promise you.

Revenue Loses Again

As we are about to enter a new tax year with bags of opportunities to fall out with Revenue & Customs, let us ponder how often they get it wrong.

Call Judge Richard James. He was the presiding tax tribunal judge in a case called Dr Ragini Pandey v Commissioners for Her Majesty's Revenue & Customs [2017] UKFTT 0216 (TC) whose reasons for allowing a challenge by the taxpayer have just been released.

"Well, here we go again." That's how he started his judgment in the case which was factually complicated and the minutia of which I need not bore you with. This was not the first time a tribunal judge's judgment had started with these words. They were used by a judge in a 2015 case about tax credits after there had been a series of such cases marked by a catalogue of errors committed by Revenue & Customs. In this latest case concerning income tax, Revenue & Customs had messed up and were severely criticised by Judge James.

The tribunal in the latest case cancelled a penalty which had been imposed by Revenue & Customs on a doctor which had omitted from the tax return required from her some of her earnings which had been subject to PAYE. The core ground for the cancellation was that the inaccuracies in the return did not amount to or lead to an understatement of the doctor's liability to pay tax. Without that, there could be no penalty as one of the conditions for imposing a penalty had not been met. You'll find chapter and verse in paragraph 1 to schedule 24 of the Finance Act 2007(available from Revenue & Customs and the waiting rooms of all good accountants' offices). 

One other thing. The successful doctor was late in putting in her appeal against the penalty. She had to ask the tribunal for an extension of time for doing so. Judge James indicated that the jurisdiction of the tribunal to grant more time for a late appeal was wider than Revenue & Customs say on the subject in their letters  and guidance to taxpayers.

Happy Returns.

No Smoker's Cough

Smuggling fags into the country is at the least likely to be bad on your pocket and bad on your health.

In a case before the tax tribunal in which a decision has just been published, a man returning with his family from Iraq entered the green channel at Heathrow with 13,160 cigarettes in his luggage. Civil evasion penalties were slapped on him for £3,226. He appealed against them to the tribunal which accepted that the man had intended all the cigarettes for his own use.