A number of recent First-tier Tribunal cases have found in favour of taxpayers in circumstances that greatly expand the definition of what constitutes a reasonable excuse compared with HMRC’s internal instructions.
It appears that HMRC continue to follow the “death, disease or disaster” principle despite the recent cases against them.
A further case was heard recently, in which the Tribunal noted that they were “concerned at the attitude” of HMRC.
The case in question was Hogg Joinery Ltd v HMRC. HMRC warned the taxpayer that returns for 2010/11, 2011/12 and 2012/13 had not been received and were still outstanding with late-filing penalties totalling £2,400. The 2012/13 return had been filed in September 2013 which should have been within the time limits.
The taxpayer claimed to have had many telephone conversations with HMRC in which they acknowledged that errors had arisen in their offices. There were also concerns about how long it had taken HMRC to notice that the returns had apparently not been received.
HMRC claimed they had only received one phone call from the taxpayer regarding the matter, but the company were able to show 10 calls lasting a total of 142 minutes. There were also further calls from personal numbers to HMRC.
The judge could not determine whether the problems with submitting returns had been with the taxpayer systems or HMRC’s, but noted the number of calls made by the taxpayer and therefore felt they had taken all reasonable steps to try to resolve the matter.
The taxpayer’s appeal was allowed.
The case shows the important of keeping records of phone calls and correspondence with HMRC as they could be useful evidence if something goes wrong. It also again highlights the fact that penalties should be appealed where a genuine excuse exists.