Disproportionate penalty

A company appealed against HMRC’s refusal to reduce penalties imposed under the construction industry scheme.

The company was run by a father and son and had been a family business until its incorporation. They tried to do the book-keeping but got in a muddle and so called in an accountant.

After reviewing the books the accountant realised that the company had employed the services of a subcontractor but that it had not registered under the construction industry scheme. The accountant called HMRC to register the company and filed the relevant return.

HMRC however issued penalty notices of £700 and £2 100 in respect of late filing.

While accepting that there were delays in submitting the returns the taxpayer’s accountant said that the penalties were disproportionate to the tax in issue.

He said the appellant was honest and the problems had arisen because of the father...