This week's opinion: 30 May 2019

Whatever form the admissible evidence takes, adequate evidence is a necessity; not a luxury.

It seems astonishing that this needs to be said but, in A Musca (TC7132) (tinyurl.com/ftt7132), judge Geraint Jones felt compelled to remind HMRC that, if it was seeking a late filing penalty, it had to provide evidence that the taxpayer was actually sent a notice to file. In this instance it had singularly failed to do so and thus the tribunal quashed the penalty.

This is yet another example of an issue on which I have commented before – the inability of HMRC’s systems to produce a proper audit trail of what has been sent to taxpayers.

In this case, all that HMRC could produce was a print-out that showed a return was issued on 6 April 2015 and the taxpayer’s current address – and this was not his address on the date the return was issued. The judge was pretty scathing about the date. Noting that in practice HMRC did not post all of the returns on one day he described the return summary produced by HMRC as ‘false, or at least unreliable, information’.

These things matter. Taxpayers are entitled to have any case against them properly supported by evidence. But it is equally important that when a penalty is properly due HMRC’s systems do not get in the way of enforcing the penalty that parliament has imposed.

As we move into a ‘digital first’ system of tax administration we must get these basic processes right.

If you do one thing…

Have a look at the latest opinion of the general anti-abuse rule (GAAR) panel (tinyurl.com/gaar11apr). In particular, read paragraph 15 which discusses the interaction between the GAAR and the disclosure of tax avoidance schemes regime.