This week's opinion

Two penalty cases – Duncan (TC5817) and Richter (TC5816) – have given me much to consider. Both have prompted seemingly straightforward questions about when penalties for late returns are due and how they are calculated. But both show that when a First-tier Tribunal embarks on a rigorous review of the legislation what should be a simple matter turns out to be anything but.

Richter has particular ramifications for Making Tax Digital (see the report on page 7). In essence the judge was concerned that HMRC’s practice of charging a fixed penalty of £300 for returns more than six months late might not be valid (he had already found for the taxpayer so his remarks are obiter). This is because the legislation imposes a penalty of £300 or if higher 5% of the tax which should have been due. When a return is late HMRC must determine to the best of its...