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The taxpayer company was a pharmacy that derived much of its income from the Department of Health which was consistently late with its payments.
In 2010/11 the business was tardy in making several payments of PAYE and National Insurance; HMRC imposed penalties under FA 2009 Sch 56.
The taxpayer appealed claiming fewer penalties would have applied had the Revenue allocated payments of PAYE differently.
The department said it was the employer that allocated payment to a particular tax month; it was not for the taxman to do so even if penalties would be reduced as a result.
The First-tier Tribunal found PAYE was a debt due to HMRC and the employer was a debtor. Each month’s PAYE was a separate debt: there was “no ‘running’ account”.
Had such an arrangement existed PAYE payments would have automatically been allocated to the oldest debt and...
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