LSE tax blunder

Posted: 26th June 2014

HMRC2There will be red faces at the London School of Economics (LSE) after it was hit with a £10,200 penalty by HM Revenue and Customs (HMRC) for filing its employers’ annual return and end of year summary more than a month late.

The LSE, which blamed an unfortunate ‘IT failure’ for the debacle, had initially been fined £20,400 for the delay – the equivalent of two months’ tax on its payroll – and HMRC had only agreed to halve that after extenuating circumstances were pleaded.

Challenging the penalty, the LSE pointed out that it had received no reminders from HMRC before it was too late and that the error was put right the moment that it was discovered. However, in rejecting the appeal, the First-tier Tribunal (FTT) noted that such reminders did not have to be sent and, on the evidence, would have made no difference in any event.

The LSE had made no attempt to 'check or query' the position after failing to receive HMRC's usual acknowledgment of receipt and, in the circumstances, its conduct could not be viewed as reasonable. However, after acknowledging the LSE’s prompt response to the blunder and blameless record in discharging its tax obligations, the FTT noted that HMRC 'may wish to consider' reducing the penalty.