Computer Problems – No Excuse For Non Compliance

Two cases which have recently gone through the Courts give clear indications that HMRC will not accept problems with your computer as a reasonable excuse for non compliance.

In the first case, an Employer operated the wrong code, as a result of which an employee paid insufficient tax on his salary. HMRC issued an assessment to collect the unpaid tax from the Employer who appealed claiming that they had not received HMRC’s email notifying the code change. This was because the Employer had been experiencing problems with their computer systems. Their appeal was dismissed by the First Tier Tribunal on the grounds that when an employer registered for online filing, it accepted that communications would be conducted electronically unless it opted out. The burden of proof of non-delivery lay with the taxpayer who had been unable to provide any evidence of this and accordingly the appeal was dismissed.

The second case involved an annual employer return for 2010-11 which was submitted on paper because the Company did not have access to the internet at the time. HMRC imposed penalties on the grounds that no online return had been received. The paper return was invalid because such returns had to be filed electronically. HMRC also had no record of receiving the paper return. The taxpayer’s appeal was dismissed because the Company had not provided a satisfactory reason as to why there was no internet access to submit the return via the internet.

Clearly if anyone wishes to rely on computer glitches, etc for non compliance, concise records need to be kept to back up the position.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

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