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TW’s Lee Sharpe apologises for failing to find anything positive to say to HMRC – but he has a reasonable excuse…

Mark made me promise that I would try to write something positive about HMRC this week: he is concerned that we are at risk of being perceived as “anti-Revenue”, rather than independent and fair.

Well, I did try… - and I fear Mark’s own recent attempt suffered a similar fate. If only they would give us something positive to write about!

One of Peter Vaines’ recent points has instead held my attention – namely that HMRC continues to, shall we say, ‘misunderstand’ the meaning of “reasonable excuse” in the context of appeals against penalties.

In a nutshell, HMRC resolutely requires that, in order for a successful appeal against penalties on the grounds of a reasonable excuse, events beyond the taxpayer’s control must have conspired to frustrate his or her efforts to file, etc., on time.

But, as we all know, that is codswallop, except perhaps to the extent of an insufficiency of funds. Fire, famine or flood are not prerequisites to a valid reasonable excuse in more general terms.

We have had a number of tribunal cases which highlight HMRC’s ‘misunderstanding’ and some of them are not new – see HMRC: Unreasonable Interpretation of “Reasonable Excuse”  It is frustrating to find that HMRC is incapable of updating its position or its guidance – and, since it seems we are now in a world where tax inspectors believe that HMRC’s internal guidance is the highest authority on the correct application of the legislation, is thereby clogging up the tribunal system with cases which should clearly have been settled in the taxpayer’s favour without such unnecessary time and expense.

What should concern HMRC’s executive – if it is interested in collecting only the right amount of tax, rather than simply taking as much as possible – is that tribunal hearings will represent only a small percentage of such cases: many taxpayers will simply accept HMRC’s assertion that there is no reasonable excuse, and pay a penalty which simply isn't due. Where banks have profited from selling PPI or ‘swaps’, the FCA now requires recompense for the customer. In essence, this is because the provider is supposed to be expert and have a duty of care towards its customers. I wonder if the Ombudsman should have similar powers, for HMRC’s “customers”.

Finally, we do publicise when HMRC “done good”: there is, for example, HMRC Secures Record £4.6m Minimum Wage Arrears for Underpaid Workers . But then there’s the fact that, after carefully anonymising a Premier League football club, HMRC happily named and shamed a couple of dozen ordinary businesses. Only time will tell if HMRC treats all taxpayers equally under the new enforcement regime. For now, however, it seems that every silver lining…

Regards all,

TW Ed