Penalties could be cancelled where the carelessness is down to the accountant not you

In a recent case (J R Hanson and the commissioners for HMRC – UKFTT 314), penalties that had been imposed on a taxpayer for a “careless” mistake on his personal tax return were overturned because the error was made by the accountant not the taxpayer himself. The judgement made clear that penalties can only be imposed by HMRC where it is shown that the taxpayer himself had not taken reasonable care. In this case, it was held that the taxpayer was entitled to rely on the competency of the accountant and did not need to consult the legislation or guidance himself.

This case could be useful in future in self assessment cases if penalties are imposed and the error is due to us as accountant. Like all case law, this judgement cannot be used retrospectively to cancel penalties imposed in the past. 

We are pleased to say that mistakes we make as a firm are rare but obviously errors do sometimes occur. If an error does occur in future, the judgement in this case could be useful for overturning penalties that HMRC will inevitably seek to impose.

The full judgement can be found here if you are interested