Fair proposal

Conditions to suspend a penalty

The taxpayer made careless mistakes in his tax return. He omitted a sum paid to him as part of a severance payment and a beneficial loan and overstated his pension contributions. As a result HMRC imposed a penalty. He accepted the amount of the fine but requested that HMRC suspend it on condition that he appoint a qualified tax adviser to prepare his next two years’ returns.

HMRC refused saying it would do so only when the inaccuracy resulted from a weakness in the person’s accounting or record-keeping system and they could identify specific improvements that would prevent the same errors arising in future. In this instance HMRC considered the failure had arisen because of the taxpayer’s lack of knowledge on how to treat termination payments and personal pension contributions. There was no weakness in his accounting or record-keeping system that...