THE TAXMAN SHOULD “hang its head in shame” after a case of “gross and repeated maladministration”, said ICAS tax director Derek Allen, after a tribunal upheld taxpayer David Preece’s appeal against a £100 penalty for a late self-assessment.
Preece, made redundant in 2008, spent years attempting to settle the tax bill with HMRC. But a series of errors by HMRC led the tribunal to waive his liability.
In his blog, ICAS’s director of tax, Derek Allen, described the taxman’s handling of the case as “shameful”.
He said: “Millions of taxpayers rely on HMRC to get their tax affairs right. Sadly, HMRC are all too often responsible for errors which cause unnecessary work … HMRC failed to deliver an acceptable service in this case and I can only speculate about how a case like this ever managed to get through to a tribunal.”
Having been been made redundant in March 2008, Preece subsequently asked HM Revenue & Customs to check whether his employer had deducted the correct tax, believing he had overpaid.
The taxman responded with a P800 calculation showing that Preece owed approximately £2,000, which he accepted and asked to pay back over a two-year period by adjustment to his tax code.
However, in January 2011, Preece received further letter from HMRC demanding payment of the £2,000 by 25 February 2011. He responded outlining his dismay, having been under the impression his underpayment was being collected through his adjusted tax code.
The taxman took his response to be a complaint, and having reviewed his file, realised that Preece had in fact overpaid his tax in 2008/09, and as such was owed about £1,800 by HMRC. That review also found that by 2009/10, Preece may have become eligible for age-related personal allowances and asked him to complete a 2009/10 tax return, which would be sent to him.
In April last year, Preece received a self-assessment return for 2010/11, which he promptly submitted online, but by June of the same year he had received a penalty notice of £100 for failure to submit a 2009/10 return. He explained he had never received that return.
The tribunal ruled that, on the balance of probabilities, HMRC had issued the wrong paper for 2010/11, instead of the return they had intended, 2009/10. It also held Preece’s evidence showed him to be a transparently honest person who had punctually communicated with HMRC and consistently tried to pay the right amount of tax. It therefore upheld his claim he had not received that return, rendering the £100 invalid.
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