in Mrs R Rendall v HMRC [2013] TC6011 the FTT decided to quash £3,200 of late partnership filing penalties. HMRC had all the correct information and had given incorrect advice on filing: giving a penalty in such circumstances was clearly not the intention of the law.
- Mrs Rendell and her husband had filed their individual self assessment returns on time.
- She normally had assistance from a friend in filing her partnership return and thought that she could manage.
- She was late filing their partnership tax return and received a sch 55 FA 2009 late filing penalty.
- She phoned HMRC who advised that she should complete a form of confirmation of the nominated partner, she did that.
- When she spoke to HMRC again she was told that she needed software, she filed a paper return.
The First tier tribunal (FTT) found that there was some muddle as to what penalties were issued and whether the taxpayer had lodged an appeal against the penalties or a late appeal and so was able to waive compliance using the tribunals own case management powers (Rule 5 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009).
Noting that the taxpayer had not provided an reasonable excuse for the failure to file on time, the FTT asked itself whether HMRC had taken into account any special circumstances.
It noted that HMRC had not considered the fact that the individuals had filed their individual tax returns on time nor did it take into account that in any event a partnership return does not in itself disclose any income chargeable to tax about which HMRC would otherwise be ignorant.
The FTT concluded that the failure not to take these matters into account in the context of a Special reduction made HMRC's decision flawed in judicial review terms. Referring to HMRC's compliance manual the case had obvious similarities to the partnership example in CH170800.
Comment
The question as to whether the strict application of penalty law is something that is contrary to the clear compliance intention of penalty law is a much under-developed argument in many of these penalty cases, see further cases and more discussion in How to appeal a tax penalty (subscriber version)
Useful links:
Grounds for appeal
How to appeal a tax penalty
Penalties: late filing
Case:
Mrs R Rendall v HMRC [2013] TC6011
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