The expert view: HMRC and the penalty regime

This is especially the case where £100 penalties are being levied from 6 April 2011 for the late submission of tax returns where the taxpayer has no tax liability. Taxpayers are being forced into becoming more pro-active when it comes to their tax compliance. Taxpayers generally have up to 30 days to appeal against an incorrectly issued penalty notice. We had, for example, experience last year of a number of tax returns being submitted prior to the 31 January deadline but still receiving late penalty notices as a result of HMRC’s IT systems not talking to each other properly.

Taxpayers should be aware that these penalty notices will be being produced through an automated system and that they may have just received one in error as a result of their self-assessment records not being updated to correctly reflect their current tax position. It is important not to simply accept them as being correct.

There appears to be an increasing number of penalty notices that have to be challenged and this can sometimes be difficult for someone who is unfamiliar with the penalty regime or dealing with HMRC.

It doesn’t help that different tax offices may be dealing with different aspects of your tax compliance and that you are no longer generally being allocated an individual HMRC officer to deal with your tax affairs.

We have had instances where we have been able to put a successful claim into HMRC for professional costs/additional work arising as a result of their mistakes in issuing incorrect assessments and so on. This is, however, generally the exception rather than the rule.

• Martin Campbell is a tax specialist at Anderson Strathern in Edinburgh