Cooper Bradshaw win penalty appeal by challenging HMRC’s “mandatory” and “discretionary” viewpoints.

This week Cooper Bradshaw succeeded in overturning a substantial late filing penalty by HMRC on behalf of a client who, through poor previous representation and his own acknowledged lack of understanding, he believed that because he had not earned sufficient money to pay tax that no Self Assessment Tax Return was due during a particular tax period.

Our client, Mr Clarke came to Cooper Bradshaw in relation to his tax affairs and in particular the late filing penalty notice for £540.00 which he had received from HMRC for not providing a return for the year ending 5 April 2014.

We went through Mr Clarke’s tax history and it became clear that his previous advisor, as well as failing to register his client with HMRC for self-assessment, had also failed to educate his client with regards to his responsibilities with regards to HMRC filings and the consequences of not doing so accurately and in a timely fashion.

Cooper Bradshaw therefore approached HMRC with an appeal on three key grounds:

  1. As no tax was due on this particular return that HMRC has suffered no financial loss.  Historically it was mandatory that if no tax was due then no penalties were applied if a Return was not made.  However, this is not not the case and HMRC has discretionary powers to waive a penalty for non-filing of a return showing nil tax due.    We therefore requested HMRC took a “discretionary” view in this particular case.
  2. Mr Clarke had been poorly advised previously and had not been informed or educated that despite receiving no income in a given tax period that he must still report this on his tax return and that having brought his affairs to our attention Cooper Bradshaw had indeed brought Mr Clarke up to date and that he had acknowledged his faults and as well as accepting responsibility he would, we believe, continue to ensure his filings were in accordance with the current HMRC legislation.
  3. Mr Clarke’s previous advisor had also been tardy in responding to Mr Clarke’s enquiries or had indeed ignored his requests for advice and indeed had never registered Mr Clarke for self-assessment.
  4. Since HMRC issues sanctions in part to “ensure compliance not penalties” we asked that they waive these penalties on this occasion.


Interestingly, despite writing to HMRC in early November 2015 no response had been forthcoming by 10th March when we wrote again to ask them to reconsider.  We were delighted to receive a telephone call a couple of days later with a letter following up confirming that HMRC had indeed decided to review Mr Clarke’s case and that they were satisfied the penalty could be dropped due to the above mitigating circumstances.

If you have concerns about your tax return calculations or have received an enquiry from HMRC please contact Cooper Bradshaw…..

[Names in this article have been changed for privacy reasons]

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