Interdepartmental confusion

The taxpayer received a state pension lump sum from the Department for Work and Pensions. She included the payment on her 2011/12 tax return which she filed in September 2012.

HMRC took the view the sum was paid gross of tax and assessed the taxpayer to tax on the money. She appealed against the assessment believing no further tax was due.

The Revenue contacted the DWP in April 2013 saying the matter could not be settled until the DWP confirmed the tax status of the payment.

The DWP replied four months later that it had not deducted tax despite having told the taxpayer it had. She accepted tax was due on the sum but rejected the penalties for late payment the taxman had imposed in the meantime.

The dispute proceeded to the First-tier Tribunal which said it was reasonable for the taxpayer to have...