Flawed decision

Should HMRC suspend a penalty?

The taxpayer failed to disclose employment income in his tax return. HMRC imposed a penalty on the ground the taxpayer had been careless. He appealed saying he ‘truly believed’ that he was already paying the correct amount of tax on those accounts. Further he had misunderstood the self-assessment tax return guidance.

The First-tier Tribunal said the position was ‘finely balanced’. The guidance on employment income for a non-UK resident taxpayer was not as clear as it could be. However ‘the more glaring the ambiguity the greater the need for a reasonable taxpayer to conduct further research of readily available materials’. The judge had no doubt the taxpayer’s mistake was genuine but it was a careless one because he had not taken reasonable care when the completing the form.

The tribunal decided to review HMRC’s decision not to suspend the penalty...