The law firm, which specialises in international tax and commercial law, said HMRC has lost more than six cases in the last few months alone in which it has been criticised by the courts for wrongly fining taxpayers. It said that the recent rulings may only represent the “tip of the iceberg” as the majority of taxpayers do not appeal fines because they assume HMRC issues fines strictly in accordance with the law.
However, McGrigors said the courts are increasingly taking a more lenient view of the law, which states that taxpayers should not be fined if they have a ‘reasonable excuse’ for late payment of tax or an overdue tax return, then HMRC. McGrigors said that legislation does not define the phrase ‘reasonable excuse’ but said that the “string of recent rulings against HMRC has made it clear that HMRC’s official interpretation is too narrow”.
McGrigors said HMRC guidance – which taxpayers receive with their returns and which is published on HMRC’s website – should not be taken as the letter of the law by taxpayers.
Jason Collins, Partner at McGrigors, comments: “The spate of recent cases suggests that HMRC has been imposing penalties far too harshly on taxpayers who have genuinely tried to comply with the law.
“Thousands of taxpayers are likely to have been wrongly fined, yet very few challenge these fines. This is because the way in which HMRC’s guidance is worded makes taxpayers think they would stand little chance in a Tribunal. Taxpayers who feel they have been unfairly fined really should challenge HMRC.”
