Take care with allocation

The taxpayer was a firm of solicitors that was consistently late paying its monthly PAYE tax and National Insurance. HMRC imposed penalties under the FA 2009 Sch 56 regime and the taxpayer appealed.

The department called the firm’s agent each month chasing payment. During the calls the officer mentioned the introduction of the new penalty regime but was vague about its implementation.

The firm appealed saying it had a reasonable excuse because it had not received money due from the Legal Services Commission and the National Taxing Team.

The taxpayer claimed the penalties were excessive because the Revenue should have allocated payments to its liability for the current tax month rather than for a previous tax month.

The First-tier Tribunal found that the appellant had been misled by the “apparent relaxed attitude of the HMRC staff to whom he spoke and who certainly failed...