HMRC win on Penalties

THE TAXMAN has won a landmark ruling to claim several months' worth of fines from a late PAYE filer.  The company, Hok, will have to pay accumulated fines for the late filing of an employer's PAYE return to HMRC, after the upper-tier tribunal on a legal technicality overturned an earlier tribunal ruling stating only the first month's fine was applicable.

Hok had failed to issue its PAYE employer's return by the May deadline.  The company's one employee ceased employment midway through the year and Hok was unaware a return still needed to be filed at the year end.  However, HMRC did not send the penalty notice until October, which allowed the fine to accumulate.

The judge at the first tribunal was clear in pointing the finger at HMRC’s lack of process and its reliance on not keeping companies informed of potential penalties.

The latest decision is seen by many as being one rule for HMRC and a different rule for taxpayers.  Anyone who filed late may now receive notices of accumulated penalties where they may not have been aware of them being liable in the first place.