The loss came after HMRC made an error in describing the wrong tax year at a tribunal. The tribunal decided that a “tax year ending April 6th 2009”, a day after the actual date of the tax year, was enough to invalidate the claim to tax avoidance that HMRC made. Jane Bailey, the judge for the tribunal, discussed this matter, stating that she cannot accept an investigation into a tax year that does not exist.
This isn’t the first time that HMRC has lost out on money from errors it has made. Last month HMRC lost out on £50m Stamp Duty from the sale of the Chelsea Barracks, a historic London site sold to a bank in Quatar. HMRC had left it too late to request the money, and judges at the Court of Appeal decided it was too late to take the case to court, a decision that the tax have since wanted to appeal.
HMRC argued in this case that despite being one day out, it was irrefutable which tax year they had meant when letters had been sent to the taxpayer, despite the taxpayer in question saying that it was fatal in their case against them. Usually HMRC can rely on a provision in tax law which can allow them to change minor errors on their behalf, but the tribunal refuted this, saying that conditions the tax office had to meet for the tribunal where not met and therefore there was no case for them to pursue.
HMRC usually win around 80% of their cases against tax avoidance, and many settle before reaching court. HMRC have said they are unsure whether to appeal the judges decision on this matter, but will come to the decision soon. Tina Riches, head of tax at Smith & Williamson has said this is an unusual case, but not uncommon. Stating a lot of the time HMRC have sent letters of notice to the wrong address. She also stated that it’s important for HMRC to play the rules if they wish to win cases that they put forward. They are not above the law, despite many news sites stating that they believe they are.
Unfortunately it’s nothing but bad news for HMRC so far this year. They are hoping to have a new system in place by 2020, ensuring quick payments of tax for UK tax payers, and a quick and easy way for them to put forward cases from their new regional offices throughout the UK.