The failed attempt of catering company Auntie’s Café to overturn penalties
for late tax returns by use of the
Convention of Human Rights will not deter other taxpayers from using human
rights in other penalty disputes.
Aunties Café challenged two fixed penalties of £1,000 each for late tax
returns on the grounds that the penalties contravened the human right
The business lost its case, which came before the special commissioners, as
the penalties were deemed to be proportionate to the defence.
Mike Warburton, tax partner at Grant Thornton, said that although the
taxpayer had lost the case, the ruling by the commissioners actually boded well
for other cases pursuing a similar line of defence.
‘The main area I am looking at is geared penalties rather than fixed
penalties. The fact that the special commissioners decided that there was
jurisdiction over a tax case was a good sign,’ Warburton said.
Geared penalties involve a penalty and a punitive interest charge geared
according to the seriousness of the error or offence.
Warburton said the King v Waldon case, where a tax penalty under European law
was found to be a criminal rather than a civil case, could still be an effective
challenge against geared penalties.
The upshot of King v Waldon was that any taxpayers who are issued penalties
are entitled to the same protections and protocols as a person facing a criminal
charge, which makes the Human Rights Act applicable to tax cases.
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