HMRC were too generous

A property development company was considered by HMRC to have underpaid PAYE and National Insurance contributions in respect of large payments to workers.

In the absence of accurate figures from the company the Revenue raised estimated assessments for the relevant years based on information from 2005/06. If the company could show the estimated figures were wrong the assessments would be amended.

The department also imposed a penalty on the unpaid tax but reduced it by 50% in line with their mitigation procedure.

The taxpayer appealed.

The First-tier Tribunal was satisfied the estimated assessments had been made on a “rational and defensible basis” given the lack of material available. It was reasonable for HMRC to assume the position was the same as for any period for which the department already had information until the taxpayer could show otherwise.

The company’s accountants “faced an uphill task” because they...