Taking Stock: HMRC holds its hands up after PAYE letter error

OH dear, HMRC have yet again left a tax tribunal with its head in its hands.

The government department had to back down in its fight to reclaim unpaid PAYE contributions in a first-tier tribunal, after already writing to the appellant that it had no tax to pay.

HMRC argued that Walkers’ Baggage Transfer, a company that transports luggage of holidaymakers exploring Hadrian’s Wall, had not accounted for the £727.80 in PAYE contributions properly due for one of its drivers.

The driver was present in the court and swiftly countered HMRC claims with a powerful right hook in the form of letter sent by the department.

The letter read: “I believe that your employer operated Pay As You Earn (PAYE) correctly using the information they had at the time. This means that I will not be asking your employer to pay the £727.80 tax due.”

The judge quickly came to his conclusion and found that there was an “obvious conflict between the terms of this letter and the stance of HMRC”, ruling in favour of the driver.

TS assumes that the judge’s decision must have drove HMRC mad, as that marks another embarrassing loss for the department in a tax tribunal. In February, the taxman lost its claim over the duty rate of some electromagnetic switches, after a review officer used Wikipedia to help fight his case.

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