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Peter Vaines of Squire Sanders highlights yet another case where HM Revenue & Customs have wrongly tried to impose penalties for the late payment of tax.

We have yet another case before the Tribunal (CED Limited TC 2633) in which HMRC have imposed a penalty because payments of PAYE were not made on time because of postal delays. [ See also Postal Delays and Reasonable Excuse - Ed. ]

The taxpayer said that he always sent his cheque for the tax on the 18th of each month so that it would reach HMRC in the ordinary course of post by the 19th which was the due date. Where the 19th fell at a weekend, he made the payment so it would arrive on the Friday.

We have been here before and know that this procedure is OK not least because of the Interpretation Act 1978 and the recent cases of Browns CTP Ltd and Trustees of de Britton Settlement. There is also the published HMRC Statement which confirms the position for VAT payments. However, HMRC still pursued this penalty to the Tribunal. Their argument was that the taxpayer must be "mistaken" because HMRC did not process the cheques until after the due date so obviously they could not have been received by the due date. The Tribunal did not think much of this argument and set aside the penalty.

HMRC acknowledged that the onus was on them to prove that the taxpayer had not sent the cheques as he claimed and under the circumstances, it is extraordinary that the matter ever got to the Tribunal. The only explanation can be that they did not believe the taxpayer and wanted his evidence tested under oath. But I thought the Taxpayers Charter required HMRC to treat the taxpayer as honest (unless they had some reason to believe otherwise). There was clearly no reason to believe that the taxpayer was not telling the truth - but even if they did entertain some doubts, they could have asked him to submit an affidavit confirming his evidence. That would have been a bit rude - but it surely would have been conclusive and could have saved the enormous waste of time and money which was inevitably involved with the Tribunal hearing.

Given the rather unnecessarily aggressive approach of HMRC to postal delays, it would seem to be a sensible precaution to obtain a certificate of posting (or to send the payment by recorded delivery). That is a bit tedious, but it would put the matter beyond doubt and possibly avoid a whole load of aggravation with HMRC.