It is always pleasing to see how the experience of our team of tax advisers continue to ensure HMRC treat our clients fairly in a tax investigation. Two cases recently have meant the clients have had initial penalty notifications significantly reduced following challenges to HMRC. A summary of these are below.
Our client (despite registering for Self-Assessment) came to us without ever submitting a tax return after becoming self-employed (cameraman) straight from university and wanted our help to bring his compliance affairs up to date.
We didn’t just help him through the disclosure process and ease his fears, we were also able to reduce his tax liability by being able to advise him on what expenses he could claim tax relief. Once we had done our calculations, using the Digital Disclosure Service we made a submission in early March. Alongside the submission was a supplementary letter providing HMRC with a good quality summary of how the failure occurred. The letter had our view on the client’s behavior. This helped when we put forward our penalty proposition which was based on full mitigation.
As part of an ongoing PAYE investigation, HMRC sought to charge penalties for careless behaviour on a number of separate aspects. But, chose to suspend penalties on only a small amount of these, meaning large penalties would become payable.
The use of suspended penalties is to encourage a client to change how they approach their tax obligations to ensure no future errors will occur. They use this approach to educate rather than penalise a client. The benefit of not collecting a penalty is when the client demonstrates they have changed their ways.
We disputed the partial suspension, arguing that all the penalties should be suspended as HMRC had accepted there was no deliberate conduct. The satisfactory measures could be put in place to avoid the same errors repeating themselves. HMRC eventually agreed to this following our representation, saving the client a significant immediate payment.
If you are in dispute with HMRC and wish for an HMRC case success, then please contact Vincent Costello.
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