In Robert, Adam and Dorothy Thornton Trading as A* Education v HMRC [2018] TC6742 an appeal against late filng penalties for three employment intermediaries returns was allowed: HMRC’s computer set the penalties instead of a named officer.

  • A staff agency who normally supplied employed staff supplied the services of two self-employed teachers to schools.
  • It was therefore an Employment Intermediary for each of those periods it was an agency supplying more than one individual to a client and payment to those individuals were made without deducting tax at source under PAYE.
  • It failed to file Employment Intermediaries returns on time.
  • HMRC assessed late filing penalties under section 98(1)(b) of the Taxes Management Act 1970.
  • Penalties totalled £1,750 for three tax quarters ending 5 July 2016 (£250), 5 October 2016 (£500) and 5 January 2017 (£1,000)

The company appealed on the basis of ignorance of the law

The FTT considered whether the penalties were correctly imposed, it found that:

  • A real life officer of the Board must make the determination.
  • HMRC was unable to provide evidence of any officer as the penalties were issued by computer.
  • No actual officer of the Board made the relevant determination of these penalties
  • As there is no human intervention in the determination process then HMRC’s policy may well be inconsistent with the law

The appeal was allowed.


In terms of ignorance of the law, HMRC’s Employer Bulletins 54 and 55, issued in June 2015 and August 2015 provided some details of the new filing requirements.

The taxpayers admitted that they should have been “more diligent and looked further into this, but frankly we consider that HMRC should have made more of an effort to make small firms like ourselves, without specialist accounts and Human Resource advice readily available, aware of these important changes”.

The FTT decided that ignorance of the filing requirements was not a valid excuse.


Ground for appeal: HMRC error or flaw

How to appeal a tax penalty

Employment Intermediaries
A handy summary of the rules and filing requirements for agencies and other intermediaries, including a PAYE reporting tool and details of filing requirements.

External links

Robert, Adam and Dorothy Thornton Trading as A* Education TC6742