All too often HMRC will point to a minor point of law, which seems to fly in the face of common sense, in order to penalise the poor taxpayer.
Consequently, it was with a wry smile that I read a recent tribunal case where HMRC got a dose of their own medicine.
Generally taxpayers have until 31 January following the year of assessment to file their self-assessment returns for the year ended 5 April. HMRC then have a further 12 months in which to enquire into the tax return before it becomes final. For example, a tax return for the year ended 5 April 2014 needs to be submitted by 31 January 2015 and then HMRC can enquire into the return up to 31 January 2016.
In this case HMRC issued a notice in 2011 to enquire into the taxpayer’s self-assessment return for the year ended 6 April 2009. But there is no tax year ended 6 April 2009…….. the tax year ends on the 5th of the month not the 6th. The issue at point was whether HMRC had issued a valid notice to enquire into the tax return by the due date.
The tribunal held that HMRC had not issued a valid notice of enquiry and as a result the taxpayer avoided paying over £650,000 of tax through HMRC’s negligence.
The moral of the story is clearly to check the paperwork carefully. It just goes to prove that the rules of procedure that HMRC like to use to its’ own advantage, work both ways.