A recent tax case highlights how HMRC can get things wrong. It may be of particular interest to partnerships facing unexpected demands for penalties from the taxman.

The second tier (formerly High Court) has ruled that a partnership that submitted its partnership statement late because it relied on erroneous guidance on HMRC’s website had a reasonable excuse for late submission of its return and all penalties were overturned. The Tribunal found that in its guidance, to the effect that no penalty would be payable if all tax was paid on time, HMRC failed to make clear that this only applied to individuals’ returns.

The partnership was able to show that its accountant had carefully researched the point and recorded the work done to obtain assurance. The Judge said that, as HMRC was the body applying the penalty, it had a responsibility to ensure that its guidance was correct and it was wrong for HMRC to seek to apply a penalty for a default that it had played a part in causing.