UPDATE:  The verdict in the case of Hok Limited v HMRC has now been overturned by the Upper Tier Tribunal in favour of HMRC.  See our blog on the case for more details.

We recently posted a case where the tribunal found that HMRC’s policy of waiting 4 months before issuing a penalty notice for late P35s was unfair.

This finding was also confirmed in the recent case of Hok Limited v HMRC. The judgement stated that HMRC’s practice was, “unfair and falling very far below the standard of fair dealing and conscionable conduct to be expected of an organ of the state”.

The tribunal went further than in the previous case by stating that “the statute does not provide that the penalty or any part of it must be levied.”

They go on to assert that merely being ‘liable’ to a penalty does not mean that the penalty stated is the minimum penalty but rather the maximum and therefore it is possible to impose a lower penalty.

It will be interesting to see if this principle could be applied to other ‘fixed’ penalties which had previously not been seen as mitigable.

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