Mills case sets tax penalties benchmark

Mills was recently reported to have been handed a 25% penalty for failing to
pay more than £450,000 in tax and national insurance over an eight-year period.

The fact that he received such a small penalty, despite being a tax lawyer
who should have been aware of his tax obligations, is now being used by advisers
to benchmark penalties against their own clients.

Mike Warburton of Grant Thornton told Accountancy Age that he had
threatened to raise the case at commissioners’ hearings if the tax authorities
pushed matters that far.

The argument, among others, had seen one client he was defending see a
penalty drop from 20% to 2.5%.

The issue of penalties and HMRC’s attitude to applying them has angered
advisers, who feel the tax authority has been applying rules more strictly
recently to fill gaps in the chancellor’s books.

Last month, a decision by the Special Commissioners suggested that where
taxpayers can reasonably be expected to rely on specialist help from their
advisers to complete returns, they have a defence against surcharges on returns
submitted late.

Angela Rowland had been misadvised as to when to claim a loss from a film
partnership scheme in her tax return and was handed a surcharge as a result of
late payment of tax due.

Special Commissioner Adrian Shipwright concluded that reliance on her
advisers could be considered a ‘reasonable excuse’.

Advisers have suggested the arguments thus upheld could be used across the
board on all penalty and surcharge matters.

An HMRC spokesman said: ‘The case is peculiar to its own facts and not
setting any general precedent. The Special Commissioner found as a fact that it
was reasonable for Mrs Rowland to rely on ostensibly competent professional

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