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HMRC internal manual

Compliance Handbook

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Special reduction: First Tier Tribunal views on the meaning of ‘special circumstances’ in the context of penalty laws: summary of key extracts

Comments in the following First Tier Tribunal (FTT) judgments are not binding on HMRC. However, they do support HMRC’s views on the meaning and application of special reduction penalty law. They may be persuasive if quoted in relation to other appeals, but it is always important to remember that they represent findings made on the precise facts of the individual appeals decided by the FTT. More detailed extracts are at CH175230 for information if required by review officers and members of the appeals teams.

Dina Foods Limited (TC 01546) - FA09/Sch56 - late payment penalty

Paragraph 9:

‘The Tribunal can only rely upon the “special circumstances” provision in para 9 to a different extent than that applied by HMRC if it thinks that HMRC’s decision in that respect was flawed. … The Tribunal should also consider whether HMRC have erred on a point of law.’

Paragraph 39:

‘We do not therefore consider that any failure on the part of HMRC to issue warnings to defaulting taxpayers, whether in respect of the imposition of penalties or the fact of late payment, is of itself capable of amounting either to a reasonable excuse or special circumstances .’

David Collis (TC01431) - FA07/Sch24 - inaccuracy penalty

Paragraph 40:

‘To be a special circumstance the circumstance in question must operate on the particular individual, and not be a mere general circumstance that applies to many taxpayers by virtue of the scheme of the provisions themselves.’

St John Patrick Publishers Ltd (TC01719) - FA09/Sch56 - late payment penalty

Paragraph 20:

‘The Tribunal finds, consistently with Dina Foods, that:

(3) lack of awareness of the penalty regime is not capable of constituting a special circumstance;…

(4) any failure on the part of HMRC to issue warnings to defaulting taxpayers, whether in respect of the imposition of penalties or the fact of late payment, is not of itself capable of amounting either to a reasonable excuse or special circumstances.’