There have been two recent Tribunal decisions which give some encouragement to those who feel they have been assessed or penalised unjustly by HMRC.
The case of Browne v HMRC TC 754 related to the failure to deliver a land transaction return for the purposes of stamp duty land tax (SDLT). This case drew heavily on the Special Commissioners’ decision in Rowland v HMRC , where the taxpayer was able to demonstrate that they were let down by their professional advisers and that was sufficient to relieve her from the relevant penalty.
This was a conveyancing matter, and it was reasonable for Mrs Browne to rely on her solicitor to submit the stamp duty return within the statutory time limit; the Tribunal considered that there was no reason for her to think that the solicitors would fail to do so. Their failure was not a fault of hers, and she therefore had a reasonable excuse for the failure and no penalty arose.
Although this is welcome confirmation that it can be a reasonable excuse to rely on a professional adviser, this defence does not apply in VAT matters because reliance on a third party is specifically precluded from being a reasonable excuse for VAT purposes.
The other case of Dauti TC 786 did not look very promising. Mr Dauti was from Bosnia and worked in the UK as a subcontract labourer. He explained to the Tribunal that many of this friends were working in the UK illegally and therefore needed to stay below the radar. He lent them money and they paid him back. These receipts excited HMRC, who claimed that his disclosed earnings were understated and issued discovery assessments.
This was obviously a very difficult challenge to defend − the onus being on him to show that HMRC were wrong − but he clearly impressed the Tribunal. They found his evidence sincere and truthful, sufficient to discharge to onus upon him that the discovery assessments should be discharged. A heart-warming story − and all the better as Mr Dauti represented himself.