More cases on the scope of HMRC powers.
The first concerns a current successful barrister. His penalty for failing to react to HMRC information notices was £1.2m+. Many would say “Ouch! That hurt!” However, in this case, the judge in the Upper Tribunal pointed out that some of the information requested went back over 9 years to the death of the taxpayer’s father and his Inheritance Tax affairs.
The judge found it “difficult, if not impossible to understand why a man of the Taxpayer’s means had not appointed a professional advisor to help him deal with all his tax affairs”. The judge felt the money spent on penalties could have been far better used! (CRC v Ronnie Tager).
With the background to the case and the incredibly lengthy delays in getting information, it is difficult to avoid thinking HMRC were on the side of the angels in this case.
In the case of J Dyson, the taxpayer appealed against a penalty for late filing of a partnership return. He said he had done all he could to ensure compliance, but it was held that he had no right of appeal whatsoever, because only the ‘representative partner’ had any rights of appeal.
Whilst it seems reasonable that the ‘representative partner’ should generally be the main point of contact for HMRC, to deny altogether the rights of other partners would seem a trifle un-sporting. The First Tier Tribunal thought so and felt it was in breach of his civil rights that he had no right to a fair hearing. However, their conclusion was that they had no powers to overrule the legislation. As the first case notes, individual taxpayers can be unco-operative, and that must be frustrating for Revenue Officers. However, does that make it appropriate for them to take action against other taxpayers, where the position is perhaps unfair?
The final ‘powers’ case shows that repayments of excess tax paid in earlier years, under self- assessment may be reclaimed in appropriate circumstances. Andrew Michael Higgs overpaid tax on account. The courts held the taxpayer was not limited by the 4 year time limit generally applying on claims.
A fair summary of the line of cases would seem to be that:
a) Circumstances alter cases. If unfortunately you find yourself amidst disaster, then look carefully at the facts to try to detect an escape hatch.
b) Investing in timely reporting and good professional advice to keep matters up to date is likely to be money well spent, both financially and emotionally.
A TAX IN TIME SAVES NINE.