Reports this week indicated that chancellor Gordon Brown was certain to
toughen the government’s stance on the late filing of self-assessment returns
and penalties. It is expected that HMRC will hike the penalty for late returns
from £100 to £250 and issue harsher penalties on those who unwittingly pay too
little tax when the pre-Budget report is delivered this Autumn.
Advisers, however, are already responding to what they see as a harsher
penalty regime by using unconventional defences.
Mike Warburton, tax partner at
said he was set to use the Human Rights Act to contest a penalty charged to one
of his clients.
Warburton said that after a ruling in the King vs Waldon case in
2001, a tax penalty under European law was found to be a criminal rather than a
The upshot is that any taxpayers who are issued penalties are entitled to the
same protections and protocols as a person facing a criminal charge, as per the
This means that when charging a penalty,
HMRC is obliged to
follow specific procedures and inform tax payers that they should be careful not
to incriminate themselves. This would provide taxpayers with more opportunities
to challenge penalties.
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Laurence Field, the head of tax at national audit, tax and advisory firm Crowe Clark Whitehill outlines the 6 'unexpected items' regarding HMRC's Making Tax Digital plans