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Faith in humanity

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We find ourselves touched by an act of humanity by HMRC. In the often cynical world of tax we occasionally come across a case so wonderfully human that it warms our hearts.

We were touched this week by an act of generosity by HMRC that was not strictly necessary, but made all the difference in the world to a taxpayer in serious financial trouble (see K Pramanik v HMRC [2018] UKFTT 0673 (TC)).

The previous employment of the gentleman in question had been terminated and tax had been withheld on the termination payment. He requested that the sum be repaid by HMRC, but HMRC was prevented from doing so because the employer had described it as a ‘payment after leaving’. In contrast to redundancy payments, payments after leaving do not attract special tax reliefs. HMRC explained that he needed to contact his previous employer to have the payment re-characterised, but instead he appealed to the FTT. The FTT held that it had no jurisdiction to interfere with HMRC’s decision.

Did HMRC have the legal right simply to drop the matter, keep the money and send the gentleman packing? Undoubtedly. But instead, in a delightful display of humanity, HMRC chose to treat the matter as an informal PAYE dispute. It accepted his existing tax return, opened an enquiry, immediately closed it, and sent him a closure notice. Such a notice is appealable, giving him the ability to make his claim again but this time on legal grounds within the FTT’s jurisdiction. HMRC also explained how he should go about doing so.

To the officers of HMRC who went the extra mile to help a man in need, we salute you. 

Smith & Williamson’s Tax update

Issue: 1424
Categories: In brief