Flawed decision

Conditions to suspend a penalty for careless inaccuracy

The taxpayer did not include the gain arising from the disposal of his business premises on his tax return. This was because the return had been prepared by a different partner at his accountants and he had not checked the file.

HMRC imposed a penalty on the ground that the omission had been careless. It refused to suspend the penalty because no suspension conditions could be put in place (FA 2007 Sch 24 para 14). This was because a similar omission would not recur in future returns so any suspension conditions imposed could only prevent a different inaccuracy arising in future.

The taxpayer appealed.

The First-tier Tribunal said there was only one specific limitation on HMRC’s discretion. This was that a penalty could be suspended only if such an action would help the taxpayer avoid future penalties for careless inaccuracy....