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Decision not to code out underpayment was flawed

18 March 2019
Issue: 4688 / Categories: Tax cases
M Rich (TC7001)

HMRC imposed late filing penalties on the taxpayer because he submitted his 2015-16 tax return late. The taxpayer appealed. He said his earnings were subject to PAYE and he never been required to self assess. Further HMRC had refunded him tax for 2015-16 after issuing a P800. It then sent another P800 telling him the department had over refunded his tax telling him to repay it voluntarily or be put in self assessment. 

The First-tier Tribunal cancelled the penalties on the basis that HMRC had already established by form P800 that he had not underpaid tax so there was no need for the taxpayer to complete a return.

The judge considered also whether there were special circumstances. He said it was ‘nonsense’ for HMRC to say the over repaid tax could not be collected by means of a tax code adjustment just because his estimated income suggested his...

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