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06 Jan 2012
THE TAXMAN is to challenge a tribunal ruling that criticised its practice of allowing fines to accumulate before issuing penalty notices.
The claimant in the original decision, Hok Ltd, did not issue its PAYE employers return by the May deadline. The company's one employee ceased employment midway through the year and Hok was unaware a return still needed to be filed. However, HM Revenue & Customs did not send the penalty notice until October, which allowed the fine to accumulate.
Further reading
Geraint Jones QC (pictured) ruled that Hok was only liable to pay the £100 original fine. He strongly criticised HMRC for failing to act in good conscience. "In our judgement there is nothing fair or reasonable in setting a computer system so that it does not generate a penalty notice until four months have gone by from the date of default," he said.
"We are in no doubt that the computer system could easily be set to generate a single £100 penalty notice immediately after the 19 May in each year. That is the course that a fair organ of the state, acting in good conscience towards the citizens of the state, would adopt," the judgement added.
Jones also ruled on several other similar cases. HMRC's decision to challenge the rulings would result in a binding decision in the Court of Appeal that could lead to the taxman changing its processes if it was unsuccessful.
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Visitor comments Add your comment
HMRC Appeal v Hok Ltd Ruling
HMRC no longer operates in an ethical way. The decision to outsource ownership of its premises to a Tax Haven and the sweetheart deals with Vodaphone and Morgan Stanley are par for the course.
Posted by: peter moore, 06 Jan 2012 | 11:45
Tax penalties have to be fair
As a former tax inspector, now with my own practice, I have been horrified to find this in a couple of cases - that HMRC did not issue a May penalty, and by the time they bothered in the Autumn, the penalties had multiplied.
HMRC should not appeal the decision, but should change its systems to issue the first penalty promptly.
Make it easy for people to know they have something to sort out.
Posted by: Adrian Huston, 06 Jan 2012 | 14:35
A Waste of very scarce HMRC resources and our money
Another example of how HMRC target the small, minimal income sector and give away billions on sweetheart deals....if the VAT people can get their computer systems to send warnings etc so can HMRC so - stop wasting our money and do something useful for a change.
Posted by: red five, 09 Jan 2012 | 07:22
And yet ...
The Revenue have recently stated that they will be '‘working together [with the professional bodies] to find ways of avoiding employers incurring and building up end of year filing penalties
without being aware of them’.
It seems that, yet again, there are two parts of the Revenue who are not on speaking terms.
Posted by: Chicken Farmer, 09 Jan 2012 | 09:42
Hock v HMRC
The late issuance of penalties by HMRC has been running for several years as a policy to bring in additional fines. The poicy will continue until the Government stops it as a matter of course. I was delighted with the Hok verdict but the fact that it is being appealed just goes to show what an insidious bunch are in charge of HMRC.
Posted by: Stephen Godfrey, 12 Jan 2012 | 15:10
Amount set by legislation, not appealable
I am the Treasurer of a small voluntary-run community centre employing two part-time staff. Apparently I failed to un-tick a 'test transmission' box on my return. I received the penalty notice on September 30th, by which time it had totted up to £500. I was told "the timing of the September run gives HMRC time to process all returns... The amount is set by legislation is not appealable".
Posted by: John Ainslie, 14 Jan 2012 | 18:02