Tribunal rebukes HMRC for computer generated warnings

THE TAXMAN HAS lost a tribunal because it failed to produce evidence that it sent a computer-generated letter to the appellants.

The tribunal heard that Philip and Tracey Ithell, who run a construction firm, had not fulfilled their tax obligations. However, they claimed that they did not receive a letter from HM Revenue & Customs giving them notice that their gross payment status was being cancelled. This status allows construction firms to establish their tax affairs after receiving gross payments from contractors.

However, HMRC had no evidence that this letter had been sent, bar a screenshot of a note that a letter had been sent. Tribunal judge Michael Connell said that HMRC could not “establish with certainty that the appellants had been given notice of cancellation of the registration of their gross payment status without delay or what reasons for cancellation had been given in the notice”.

Ray McCann, director at McGrigors law firm, said that this case showed that HMRC was getting its “basic procedures wrong”.

“The law gives taxpayers few protections from HMRC and as a result those that are there are very important and it is worrying that HMRC increasingly relies upon anonymous computer-generated forms to meet obligations imposed on it by Parliament that are intended to ensure that taxpayers (even non-compliant taxpayers) are treated fairly,” he said.

This ruling will be a “black mark” against HMRC, but it is unlikely to reverse the move to automatically generated letters, he added.

However, it does signal a “double standard” from HMRC, which does not accept postal delay as a reasonable excuse.

An HMRC spokesman said:”HMRC is considering the decision carefully, before deciding whether to appeal.”