There was some "charged" debate on this site the other week wrt HMRC's treatment of those who have disabilities, and the accessibility of its services.
Ironically, Accountancy Age have published an interesting article about HMRC's treatment of a person with Asperger's syndrome. HMRC fined Peter Graf von der Pahlen £400 and the tribunal that he took his appeal against the fine to upheld that fine.
Well, reading the report in AA indicates that neither HMRC nor the tribunal came out of it particularly well:
"..the one organisation that is not making allowances for disability is HMRC.
Even if HMRC and the tribunal had their reasons for the imposition and upholding of the penalties, this case helped highlight numerous issues. HMRC acting aggressively to even the most vulnerable, the effect of service changes on that group and an apparent inconsistency in tribunal decisions."
In today's world, if you don't fit into a predetermined bureaucratic box then you are faced with quite a mountain to climb to satisfy the demands of the state.
Here is the article in full:
"A FIRST-TIER tax tribunal found that Peter Graf von der Pahlen did not have a reasonable excuse against a £400 fine imposed on him.
This case, held in June this year and published this month, is both fascinating and disturbing. It touches on many contentious elements around HMRC's service strategy: the taxman's increasingly aggressive stance; the lack of exemptions for people to file paper returns; and the closure of HMRC regional offices.
Von der Pahlen runs two businesses, JN Dimensions and Your Building Expert. He was under the impression that he had submitted the end of year employer returns in April 2010. However, he received two penalty notices for £400 each in September - accumulated since April.
The tribunal heard von der Pahlen was delayed because the HMRC software programme for submitting returns failed to work properly and he was told to download an additional programme for one return. He said he sent the return on time, but HMRC said it had not received it. For the other return, von der Pahlen filed the paper return in person on 17 May 2010 because of his problem with HMRC software. HMRC said it had not received this return. It also said that von der Pahlen had been notified repeatedly that he had to file online.
Beyond employer's control?
There were two arguments to be made against the penalty, both around reasonable excuse. HMRC's own definition of reasonable excuse says that is must be "beyond your control". Von der Pahlen claimed that his disabilities - and the fact that English was not his first language - were beyond his control.
The businessman had had face-to-face advice from HMRC since 2004 and tax documents had always caused problems. Because of this, he would often drive to HMRC offices several times a day.
But this service was removed. He could no longer speak to staff in the office so he had to phone call centres. A person with Asperger's syndrome has difficulties in having a proper phone conversation. The consequent stress, von der Pahlen claimed, had prevented him from filling in forms correctly.
Another element of this defence was that the change from paper filing to online filing disrupted his routine. A psychologist's report, mentioned at the trial, states: "Peter is inflexible in his routines and cannot break a routine once started".
Keith Lovett, director of AutismUK, says this is classic behaviour for someone with von der Pahlen's condition. "The change of the routine would be a big issue. It becomes more resistant depending on the degree. The more you show Asperger individuals how to do something, the more concrete that becomes in their minds."
What is a reasonable excuse?
The tribunal did not go for this defence. While the tribunal "sympathised" with von der Pahlen's situation, it found that these problems were "continuous rather than sudden or unexpected" and he should have taken them into account before beginning the process of filing.
But there was a second defence open to von der Pahlen. The requirement that "reasonable excuse" must mean "circumstances beyond your control" is simply HMRC's interpretation.
Geraint Jones QC, a tribunal judge not involved in this case, has ruled on many cases recently where reasonable excuse is treated in its plain English term - that is, an excuse that is reasonable. The cases where he found in favour of the taxpayer are wide-ranging. They include a cashflow problem, miscommunication between advisor and client and problems with computers, among others.
Robin Williamson, chair of the Low Incomes Tax Reform Group, points out the fact that von der Pahlen "is obviously a man who goes to some lengths to fulfil his tax obligations" having visited local offices up to three times a day. He did not use his health as the only reason for late filing as he made attempts to submit his form.
If nothing else, there is inconsistency in its application. "Perhaps the first tier tribunal must be a little more collegiate," Williamson says. "We would say look up reasonable excuse in the dictionary and it does not say exceptional circumstances."
There were other factors in this case that might explain the tribunal's decision, says Hartley Foster, partner at lawyers Olswang. First, there is some doubt about whether von der Pahlen called the helpdesk when he said he did; and second, the impression given is that HMRC have lost patience as late filing penalties have been given in the previous four years.
However, this is an example of the HMRC's overly aggressive stance, Hartley adds. Not only has it led to an unfortunate decision, but HMRC has not gained much from allowing the case to run its course when costs are taken into account. "One hopes they will be more sensible in future. It is not cost-effective in managing resources," Hartley says.
Nigel May, tax partner at McIntyre Hudson, echoes this view. "The thing that shook me to the core was that HMRC took this to tribunal at all, let alone that the tribunal found for the Revenue. It seems to me that in the age of the Equality Act (see box), the one organisation that is not making allowances for disability is HMRC."
Even if HMRC and the tribunal had their reasons for the imposition and upholding of the penalties, this case helped highlight numerous issues. HMRC acting aggressively to even the most vulnerable, the effect of service changes on that group and an apparent inconsistency in tribunal decisions.
"It is a case one reads with sorrow," says May. "How can it have been right that this case was taken? It reflects badly on the entire system that the HMRC did not take account of the guy's disability, the tribunal did not take account of the disability and he went without representation.
"Not many people come out of this case with any credit."
Tax does have to be taxing.
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