Posted by James Pearson on 25 Nov 2011

HMRC Criticised for Delays in Issuing Penalties

HM Revenue and Customs (HMRC) have been criticised for unfairly delaying of issuing penalties.

In a recent tax tribunal case (HMRC Vs Hok Ltd) the courts heard how HMRC has typically delayed issuing penalty notices for late submission of P35 Employer Annual Returns for up to four months.

Under the penalty rules the penalty payable is £100 for every 50 employees (or part thereof) for each month (or part month) that the return is late meaning that by September a late filing penalty is issued for £400 or £500 even though the company may be unaware that they have done anything wrong.

In this particular court case, Hok Ltd argued that, although they didn’t dispute the original £100 penalty, ‘had HMRC timeously notified it of its default, it would have been remedied [at] a far earlier time’ and thus the additional ongoing penalties would not have occurred.

An HMRC spokesperson said of the process

“The vast majority of employers file their annual returns on time. The timetable for issuing penalties is designed to allow a reasonable period for a nil return to be sent in thus avoiding any penalties being issued to customers who did not need to operate PAYE in the year concerned but who did not let us know until after the deadline. It also gives time for us to make sure all returns in by the annual deadline have been processed.”

The tribunal ruled in the favour of Hok ltd and we would ask anybody that may have received similar notices to this to contact us.


See also…

Companies House and HMRC Scam Alert

HMRC Guidance Wrong on Directors Tax Returns

HMRC Telephone Scam Warning

HMRC Enquiries & Investigations

HMRC Free to Access Taxpayer Bank Accounts

Phasing of HMRC Penalties

HMRC Task Force Targets South West Property Owners

HMRC to Force Accelerated Payment of Inheritance Tax

Offshore Tax Evasion: An HMRC Briefing

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