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Taxpayer wins claim for special relief

A taxpayer has won an appeal to be given special relief for tax owed to HMRC.

The first-tier tribunal (Dr Montshiwa Doug Montshiwa v HMRC, TC04701) ruled that HMRC was wrong not to grant special relief on their claim to recover unpaid tax of about £17,000 (including penalties and surcharges) it said Montshiwa owed.

HMRC said that Montshiwa owed £17,121 for the tax year 2006-2007.

Because Montshiwa was out of time to challenge the determination by submitting a self-assessment tax return, his only remedy was to claim special relief.

HMRC may notify a person that he should complete and deliver a self assessment tax return giving the amount of income tax owed.

In the absence of such return, HMRC is entitled to issue a person with a determination under Section 28C TMA.

The tribunal said that although Montshiwa was late in making his appeal against the penalties and surcharges, and in notifying that appeal to the tribunal, this had not caused prejudice to HMRC.

The tribunal said: “If the appeal had been made and notified on time, we have no doubt that it would have been held over pending clarification of the claim for special relief. It would not have been heard independently of that claim. One reason for this is that the surcharges are calculated as a percentage of the tax due. If, therefore, this Tribunal decides (as it has) that the tax due should be reduced, then the surcharges must be reduced too.”

The tribunal rejected Montshiwa’s appeal against a penalty for late filing but said that he was entitled to special relief, reducing his tax bill to £325.