We have discussed in this briefing before the fact that HMRC’s systems do not always produce the evidence that is required to support its case in an appeal before a tribunal. Another example has recently been recorded.
The England and Wales Cricket Board made a VAT payment late. HMRC imposed a surcharge of over £100,000 on the late payment because the Board had had previous defaults and was thus within the default surcharge regime.
The Board appealed on the basis that it had not received notice that it was in the regime. Although HMRC’s systems retained a copy of the notice, didn’t retain any evidence that the notice had actually been posted and thus there was no evidence before the tribunal to challenge the Board’s argument that the notice had not been received. Whether or not the notice was ever issued, or got lost in the post ultimately did not matter. HMRC could not put forward evidence to support its case.
While this is no doubt good news for the Board it does raise some general concerns. The proper administration of the tax system does depend on clear and unambiguous evidence of what HMRC has and has not done being available to tax payers and the tribunal. HMRC’s systems historically have not always done that, as this and other cases show, and we can only hope that as we move to a wholly digital world of tax administration, lessons will be learned and systems will be designed to retain all of the necessary documentation.
If you would like to discuss any of the points raised, please get in touch with Andrew Hubbard or your usual RSM contact.