Client Delighted as HMRC Failure to Notify Penalty Notice Withdrawn
Individuals and businesses must tell HMRC when they become liable to pay tax, such as income tax, capital gains tax, or corporation tax, or when their circumstances change. This includes reaching key thresholds, such as the statutory limits regulating VAT liability.
KANGS has successfully assisted our client, a labour supply company, secure the withdrawal of a ‘Failure to Notify’ Penalty Notice issued by HMRC pursuant to Schedule 41 of the Finance Act 2008.
HMRC alleged that our client’s company failed to meet its obligation to notify its liability for VAT and sought to impose a financial penalty of approximately £435,000. Our client denied that it had failed in its duty and instructed the team at KANGS to oppose the proposed penalty.
Nazaqat Maqsoom of KANGS details how this successful outcome was achieved.
The Circumstances
HMRC issued a Failure to Notify Penalty Notice alleging that our client company had failed to provide the requisite information for the quarterly period in which it should have been registered.
Our client vehemently denied the allegations, stating that notification had been provided by post as requested by HMRC. In addition, HMRC had refused the client’s original VAT registration application, and had evidence that the notification had been received.
Upon receipt of a Penalty Notice, the recipient is entitled, within a strict thirty-day period, to either request a Review of the penalty decision by an independent HMRC officer or Appeal the decision to the First Tier Tax Tribunal. Our client opted for a Review by an independent HMRC officer.
The Relevant Law
The Finance Act 2008 provides the following.
s. 123 Penalties for failure to notify etc.
This section provides that Schedule 41 contains provisions for imposing penalties on persons in respect of failures to notify HMRC that they are chargeable to tax etc.
Schedule 41 states that a penalty is payable by a person who fails to comply with one or more scheduled obligations which include:
‘obligations to notify liability to register and notify material change in nature of supplies made by person exempted from registration.’
VAT Regulations provide that where a company’s annual turnover exceeds the VAT threshold of £90,000, it should charge VAT for the products/services it provides at the prevailing rate.
How We Assisted Our Client
Following the issue of the Penalty Notice, the KANGS team immediately set to work to ensure observance with the strict time limit imposed and:
- attended upon our client taking detailed instructions, advising upon the position and the appropriate course of action to adopt in order to contest the proposed penalty,
- examined all correspondence and documents served by HMRC,
- collated and examined all pertinent documentation required to support our client’s position and prepared a bundle of relevant exhibits to present to HMRC,
- prepared detailed Written Representations which were presented to HMRC together with the prepared bundle of exhibits,
- conducted an appropriate dialogue with HMRC throughout,
- attended our client and advised as the matter progressed.
The Highly Satisfactory Outcome
Following consideration of our client’s detailed response, which had been served within the strict period allowed, HMRC confirmed that our client’s contentions had been accepted in full and that the Penalty Notice had been withdrawn.
Naturally, our client was elated with this result achieved by the team at KANGS.
Had the Notice not been withdrawn, our client’s company would have faced a substantial adverse financial impact. Achieving a successful outcome also lifted the stress and burden placed on our client by a period of sustained uncertainty.
How Can We Assist?
Facing any form of financial penalty or other sanction proposed by HMRC can present a challenging scenario for companies, private businesses and individuals, whatever the size of their enterprise.
If you receive a Failure to Notify penalty it is essential that you immediately obtain expert legal advice. It is advisable not to have any contact with HMRC, including participating in interviews of any kind, until you have obtained that advice.
KANGS has earned a nationwide reputation for our services to clients and we are consistently highly-ranked by the leading legal directories, Chambers UK and the Legal 500, for our work in financial crime defence.
If you are facing any type of HMRC investigation, please do not hesitate to contact the team at KANGS using the contact details below as they will be delighted to assist you:
Tel: 0333 370 4333
Email: info@kangssolicitors.co.uk
We provide initial no obligation discussion at our three offices in London, Birmingham, and Manchester. Alternatively, discussions can be held through video conferencing or telephone.
Top ranked by legal directories Chambers UK and the Legal 500
