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HMRC Is Shite
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Wednesday, 17 October 2018

Tribunal Rules Against HMRC - No Valid Determination of Penalties by HMRC



HMRC lost a First Tier Tribunal in September because they couldn't prove that a series of fines were issued by a real live HMRC officer!

ICPA reports that recruitment business Expion Silverstone Ltd, had filed late returns for the first three quarters of the 2016-17 financial year. Consequently, HMRC issued the company with three penalty assessments, all on 19th April 2017, for £250, £500 and £1,000.

S.100(1) Taxes Management Act 1970 states that an officer of the Board [HMRC] may make a penalty determination, and the onus of proof lay with HMRC to justify the imposition of the penalties.

The only evidence HMRC put forward was a computer printout. This was insufficient, as the Revenue did not constitute an officer, nor a real officer at that. The Tribunal therefore issued directions to HMRC requiring them to provide the following evidence:
  1. name of the officer who made the penalty determination;
  2. details and evidence of how and when that officer made the determination;
  3. the process by which the HMRC computer was then instructed to send notification to Expion Silverstone Ltd; and
  4. how the determinations were subsequently recorded on Expion’s computer records.
After being granted an extension of time by the Tribunal to comply with the direction, after two months all the Revenue could offer was:
“Although HMRC has been granted a time extension it is still not possible to provide a detailed response to these directions. These penalties were automatically issued by HMRC’s computer systems therefore we cannot provide a named person in respect of individual cases. 

The computer recorded the penalties and issued penalty notices on 19/04/2017 in accordance with HMRC’s policy in respect of late filing of Employment Intermediary returns.”
Why did HMRC take two months to come up with an answer that was obvious to all from the beginning?

Tax does have to be taxing.

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4 comments:

  1. Does this set a precedent for other 'penalties' which have been issued in this way?

    If all they can offer is a computer printout, perhaps there will be more appeals from accountants. There might even appeals against penalties that have already been issued?

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  2. Why did it take 2 months? Because they are dishonest, filthy, scumbags who lack both courage or intelligence but enjoy playing games with peoples lives.

    Off topic - returning to the issue of HMRC's toxic staff bullying culture, I wonder why a google search of "hmrc bullying" brings five MILLION three hundred and seventy thousand results if everything is hunky-dory as Jon Thompson and the HR cover up merchants??

    It's time HMRC were honest about how they have mistreated staff and ruined lives. Until they do, how can other people be protected from them and how can we trust them to treat taxpayers with any respect?

    I call into question the conduct of Mr Barker in HR. He knows what he did in covering up bullying and facilitating further bullying. We know what he did. He failed to account for his conduct because he can't.

    The House of Commons inquiry into workplace bullying shows that these can't be hidden forever. Those in HMRC who have done wrong will be exposed.

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  3. 20th century legislation to deal with 21st century IT.Presumably HMRC were hoping to endorse existing computer procedure without need for change to law.It needs to be brought up to date so that undeserving cases do not escape on a technicality which also brings law into disrepute.

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  4. I think the Tribunal might have missed this case and I thought HMRC might have quoted it (Morgan v HMRC and Donaldson v HMRC [2013] UKFTT 317 (TC)). The same principles apply methinks?

    The tribunal held (Mr Thomas dissenting) that HMRC had decided that a daily penalty should be payable because a high level decision by HMRC officers had been taken and this decision was implemented by a computer programmed to assess the penalty on taxpayers falling within certain parameters. The tribunal found that paragraph 4(1)(b) did not require an individual officer (or officers) to make such a decision. It must have been envisaged that HMRC would utilise a computer programme to enable it to issue penalty notices on a large scale. The tribunal considered section 93(3) of the TMA 1970, which paragraph 4 of Schedule 55 replaced. This specifically stated that a decision had to be taken by an officer of HMRC. As Parliament did not retain this wording, the tribunal found that a high level decision of HMRC must have been sufficient to satisfy the condition in paragraph 4(1)(b).

    ReplyDelete