HMRC's stance in the recent case of Raymond Tooth does not bode well for the proposed Making Tax Digital requirements.
In this case the taxpayer entered into a planning arrangement; the software used to prepare his return could not process the transaction and so a work-around was advised; this was done and full disclosure made on the return.
HMRC sought to make a late discovery assessment in the grounds that the taxpayer had deliberately understated his tax liability. They lost - the judge said that HMRC's argument was unreasonable.
However, with even tighter time pressures on both quarterly and annual returns and a likely requirement for new software under Making Tax Digital, some acceptance from HMRC that people trying to do the right thing should not be penalised would be reassuring - to me at least.
Date: 8th December, 2016
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