TaxAdministrationRuling paves way for taxpayers to sue HMRC

Ruling paves way for taxpayers to sue HMRC

After a landmark court decision, taxpayers may now be able to sue HM Revenue & Customs for damages from its mistakes

The Court of Appeal has found in favour of a builder who lost £500,000
resulting from a litany of errors by
HMRC when it processed his
company’s Construction Industry Scheme (CIS) application in 1999. The court
recoginsed a duty of care existed, allowing Neil Martin’s claim for damages.

A High Court ruling in 2006 found HMRC had no duty of care when negligence
occurs but as a result the
court
of appeal’s decision
, HMRC does have a duty of care and taxpayers may now
sue HMRC for damages in certain circumstances.

According to reports, the case will have huge ramifications, because HMRC
staff regularly help taxpayers with their returns, applications and claims.

Keith Hobson, of national law firm Halliwells LLP said of the ruling: ‘We
have encountered clients who will be monitoring this case very closely in
relation to their own disputes with HMRC and, in future, other similar actions
may be brought.

‘This ruling clearly redresses the balance of accountability between business
and HMRC. A new, more punitive penalty regime is expected to come into effect in
2009 in respect of tax penalties for errors in certain documents. It is
therefore only right that HMRC are seen to abide by the same standards which
they seek to impose on the taxpayer.’

What made Martin’s case unique was that a HMRC employee took it upon himself
to complete the declaration for a CIS sub-contractors registration card instead
of a company exemption, contrary to Martin’s intentions.

HMRC might still appeal the decision in the House of Lords.

Further reading:

Arctic Systems costs HMRC £500,000

Overview: cost-cutting targets for taxman

Related Articles

LITRG urges government to consider tax changes in disability work plan

Administration LITRG urges government to consider tax changes in disability work plan

2d Lucy Skoulding, Reporter
HMRC appeal rejected in Tottenham Hotspur case

Administration HMRC appeal rejected in Tottenham Hotspur case

2w Emma Smith, Managing Editor
HMRC issues updated Trusts Registration Service guidance

Administration HMRC issues updated Trusts Registration Service guidance

3w Emma Smith, Managing Editor
New trading allowance: simplicity, but not as we know it

Administration New trading allowance: simplicity, but not as we know it

2m Emma Rawson, ATT Technical Officer
‘Improve rather than lose’ disincorporation relief, tax body urges

Administration ‘Improve rather than lose’ disincorporation relief, tax body urges

3m Austin Clark, Reporter
Are you ready for the Trusts Registration Service?

Administration Are you ready for the Trusts Registration Service?

3m Helen Thornley, ATT Technical Officer
Advisers bullish despite Brexit concerns

Accounting Standards Advisers bullish despite Brexit concerns

1y Fraser Simpson, Reporter
Brexit: Five questions accountants should be asking

Accounting Firms Brexit: Five questions accountants should be asking

1y Fraser Simpson, Reporter