Tax payment reallocated without taxpayer’s knowledge

While the taxpayer was abroad her agent submitted her 2015-16 self-assessment tax return. He failed to tick the box stating she had a student loan which resulted in her owing tax for the year. But she did discover she owed an amount for her loan until her return more than 12 months later. She had previously paid tax for 2016-17 but HMRC set this off against the student loan for 2015-16. This resulted in the tax for 2016-17 becoming outstanding. HMRC imposed penalties for this.

The First-tier Tribunal described this as an ‘unusual situation’ with HMRC making ‘various assertions … as to the lawfulness or regularity’ of what it had done in the taxpayer’s case. HMRC said it had opened an enquiry into the taxpayer’s 2015-16 return but there was no evidence to support that assertion. Neither could HMRC produce evidence of when it informed the taxpayer about how it...