This week's tax update is a tax penalty and appeals special. No one in public practice can be surprised to note that late filing and late payment penalty appeals are taking up a substantial amount of the First Tier Tribunal's (FTT) time. They take up a substantial amount of everyone's time.

FTT judge Ann Redston makes the point in a recent late penalty appeal decision that HMRC's insistence on using the mantra that a reasonable excuse is "an unexpected or unusual event" is helping to clog up the Tribunals. "Reasonable excuse" was not thus defined by parliament and so HMRC's practice means that it automatically rejects many appeals which it clearly should not, resulting in a massive waste of time and taxpayer's money. Ironically her judgment in that appeal ran to 29 pages and the net result was just £757 for HMRC, whilst the taxpayer in question had £94 of penalties cancelled. The taxpayer got muddled by online filing, not once but twice and was not fast enough to rectify her actions once realising that a mistake had been made. HMRC as well as the taxpayer got muddled about the penalties and the tribunal was saved because the taxpayer brought her files to the hearing allowing the tribunal officials to work out the penalty chronology. I have every sympathy.

We have a new and detailed guide to appealing tax penalties for advisers, which is full of practical hints and tips. On daily penalties, if you have any open daily penalty cases it is worth appealing them. HMRC's automated system may well be deemed deficient in terms of the legislation. The Upper Tier Tribunal will decide this matter later this year. 

Subscribers: don't miss this time's new guide to penalty appeals.

Scroll down for news and updates.

Best wishes

Nichola Ross Martin FCA Tax Director


Your online Virtual Tax Partner®: practical support for accountants, tax advisers and their clients

News and freeview

HMRC's definition of 'reasonable excuse': too narrow
HMRC's definition of 'reasonable excuse' makes for a waste of time and resources: it is "too narrow" according to First Tier Tribunal Judge Ann Redston. As a result cases come to the Tribunal when they could be resolved by HMRC.

Daily filing penalties appeal success
In Robert Morgan v HMRC and Keith Donaldson TC02720 two taxpayers had their daily £10 late filing penalties quashed on technical grounds.

HMRC nudge letters get the "cold shoulder"
Around 1,000 'nudge' letters have been sent to individuals paying tax at a lower-than-expected effective tax rates. This is a trial and not publicised campaign.

Prohibition of corporate members from LLPs
The government department, Business Innovation & Skills (BIS) has published a response to a consultation document relating to greater transparency and trust in UK business and included a proposal to prohibit corporate membership of LLPs.

Changes to PAYE penalty notices
HMRC is reducing the number of reminders sent in the run up to RTI.

Accelerated Payments and Follower Notices
Taxpayers who have sought tax advantages through participation in a tax avoidance scheme to pay tax upfront.

Subscribers: new guides and updates (paid content)

How to appeal a tax penalty (subscriber version)

NEW: a taxpayer may make an appeal in different ways depending on the type of penalty and circumstances, we list the grounds for appeal, discuss the appeal process and preparing for and attending a Tribunal hearing.

Purchase of own shares (masterclass checklist)
UPDATE: step by step guide

Editor's choice


NEW: save on scheme charges: owner managers can create flexible pension arrangements and make huge savings on the annual running costs of scheme by setting up their own Small Self Administered Schemes.

Dividends: formalities for companies

UPDATE: a useful reminder for directors and company secretaries

Toolkits & checklists

Close company loans toolkit
This guide takes a detailed look at the corporation tax treatment when a close company makes a loan to a participator (director-shareholder). It also provides links to our guides for individuals on the making of loans to companies.

Director's loan account toolkit

HMRC instructs staff to examine directors' private expenditure during the course of an enquiry into a close company's books and records. In most cases, the company will be expected to produce a transaction history of any director's loan or current account.

Property profits & losses: toolkit

UPDATE: a handy summary if you are a landlord or advising one on self-assessment.

Director's tax planning toolkit 2014/15

UPDATE: like all our maintained guides a rolling planner so we keep updating it when we find practical points that will interest you.

Accounts: tax health check (self-employed)
This is a checklist that will provide you with a lot of pointers to key areas for discussion with clients. It is generalised review because clients are involved in so many areas of business.

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