Anyone passing HMRC’s headquarters in the centre of Westminster cannot help but be impressed at how formidable a building it is.
It creates the very physical impression of the department which it houses also being seemingly impregnable.
That might be all very well and impressive but for a slew of recent, critical coverage which has given rise to the idea by social media sceptics that it would be possible to obtain more of a sympathetic hearing from the walls of 100 Parliament Street than from the individuals who work within it.
The latest example has come in the form of a stinging rebuke of HMRC’s attempt to fine a homeless man for filing his tax return belatedly.
It had pursued self-employed electrician Krzysztof Pokorowski when he failed to file his 2014-15 return on time after he claimed that he lost his job, home and personal papers.
After a spell sleeping rough, he eventually succeeded in finding fresh employment and permanent accommodation.
Within three months, he filed his tax return, which was by then more than a year late.
Nevertheless, HMRC demanded £1,600 in penalties, insisting that it had sent reminders to Mr Pokorowski’s previous address.
He complained, maintaining that his homeless was the kind of ‘special circumstance’ which provided him with a reasonable excuse for filing the return after the date that he should.
A tax tribunal judge has not only agreed with him but – in a ruling which has just been published – has described HMRC’s behaviour as both “ridiculous” and a “scandal” (Source).
A lot has been written on this shocking case and quite rightly so. However, one of the gobsmacking points is that HMRC did not contest Mr Pokorowski’s evidence. This included his claims to be homeless at the time and the fact that his records had been thrown in to the road and they were either lost or stolen.
So it wasn’t the case that HMRC did not believe his account – they simply did not care!
Despite offering an apology, the Revenue has not exactly undone its appearing to be unduly harsh.
However, although shocking, this isn’t the first time that HMRC has had to brace itself for criticism over this sort of behaviour.
Eighteen months ago, it was told by another tribunal judge to “get its house in order” after levying a penalty against another taxpayer for what it claimed was the late submission of a self-assessment return.
The Revenue claimed that Peter Jacks had been sent a notice to file but couldn’t provide proof that it had actually done so.
As Judge Geraint Jones declared at the time of the hearing in August 2017: “Adequate proof is a necessity, not a luxury” (Source)
In addition, at the same time that Mr Pokorowski was contesting HMRC’s fine, the organisation was receiving a severe dressing down from a committee of the House of Lords, which concluded that the extra powers which it has been afforded in recent years risked undermining the rule of law (Read More).
Committee chairman, Lord Forsyth of Drumlean, acknowledged that while the Revenue was right to tackle tax avoidance and evasion,
“Our evidence has convinced us that this balance has tipped too far in favour of HMRC and against the fundamental protections every taxpayer should expect”.
All three instances suggest that the mission statement which forms a prominent part of the Revenue’s last annual report ring a little hollow.
Whilst trumpeting an increase in tax revenue collected, HMRC stressed that its values include showing respect and demonstrating integrity (Read More).
“We know”, said the report, “it’s much better and more cost effective to help customers get their tax affairs right from the start, rather than spend time and resources fixing mistakes after they happen” – something which is clearly contradicted by recent events.
Whatever the reason, both individual and business taxpayers have every right to expect that they are treated fairly and with common sense by the taxman.
These latest controversies suggest that HMRC has some work to do to restore its reputation.
For more information on any of the topics raised above please contact our helpful team of tax advisers, you can also read more about reasonable excuse and HMRC here, learn more about completing a tax return and all about tax investigations here – or – check out HMRC making more headlines below.