Like any large organisation, HMRC sometimes acts in a way that can make individuals, who may be challenged by this monolith feel intimidated. Fortunately, there are general rights of appeal. Recent cases have shown that these rights are useful in ensuring HMRC do not overstep the mark and abuse their powers.
In M. Miron, it was held that the taxpayer’s accountants were at fault in not following a fairly simple procedure. However, that did not excuse the ‘terrible muddle’ that the taxpayer ended up in. The fact that HMRC was a large organisation could not justify a situation where one hand did not know what the other was doing. “The whole purpose of maintaining a file was to ensure knowledge is disseminated across an organisation”. Thus the taxpayer had a ‘reasonable excuse’ in not filing her appeal in a more timely manner.
Similarly, in M. Capuano the ‘staggeringly bad’ service provided by HMRC generally, contributed towards the taxpayer having a ‘reasonable excuse’ for late filing.
M. Beardwood was also held to have had reasonable excuse for late filing. Indeed the First Tier Tribunal said it was ‘difficult to see what more the appellant could have done’. They considered HMRC had wasted everyone’s time in bringing a case which had very little merit on the side.
This contrasted with R. Popat, where the taxpayer (who again won) was allowed an appeal where he wished to postpone payment of tax assessed on an assessment. The taxpayer only had a low hurdle to overcome to get tax postponed, pending settlement of the relevant appeal. The purpose of the postponement hearing was not to settle the appeal finally on its merits, but to allow tax collection to be postponed pending a full rehearsal of all the relevant facts.
For advice on HMRC powers and penalties please contact either Paul Eaves or David Stebbings.