Tribunal – late submission of P35

A tribunal case once again looked at the issue of whether HMRC had acted unreasonably in delaying the time it takes to send a penalty notice to taxpayers. In the most recent case heard by the tribunal, the taxpayer received a penalty for late submission of a P35 end of year employer return. The deadline for submission of the P35 was 19 May 2010 and the first penalty notice was not received until 27 September 2010. In only the second paragraph of the tribunal judgement we are informed that HMRC had provided no explanation as to why the issue of the penalty notice was delayed 'for such an inordinate period of time'. Following receipt of the penalty notice, the taxpayer filed an end of year return (on 25 October 2010) but further penalties were issued totalling £600. The taxpayer appealed the penalties and also argued that there was a reasonable excuse for the late filing. The Tribunal found in favour of the taxpayer and the appeal was allowed. Interestingly, the judge commented that even if the reasonable excuse had not been accepted, he would still have reduced the penalty charge. The issue of HMRC not sending taxpayers reminders to submit P35’s clearly concerned the tribunal judge as did 'HMRC’s dilatoriness in failing to send out a First Penalty Notice for four months or thereabouts'. The judge was clear that 'the conduct of HMRC in desisting from sending out a timeous First Penalty Notice gives rise to conspicuous unfairness which would be recognised as such by any fair-minded objective observer.'