IS THIS THE SORT OF TAX AUTHORITY YOU WANT? - PART 11

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IS THIS THE SORT OF TAX AUTHORITY YOU WANT? – PART 11

Mr Nowroozi is in his late 60s and has serious health issues.  In 2014 he was diagnosed with stage 4 prostate cancer which had spread to his hip bone and lymph nodes.  He is still undergoing chemotherapy.

In 2017/18 Mr Nowroozi sold a house.  HMRC assessed him to tax of £44,277.  He, or rather his then accountants, appealed against the assessment on the grounds that the property qualified for private residence relief.  The appeal was sent to the First-tier Tribunal, which issued directions for the progression of the appeal.  The accountants, sadly a firm of Chartered Accountants, appear to have ignored the Directions.  The Tribunal warned that the appeal would be struck out if Mr Nowroozi did not confirm by 7 March 2017 that he intended to proceed with the appeal.  In the absence of a response, the Tribunal wrote to the accountants stating that the appeal had been struck out but they had a right to apply for reinstatement within 28 days.  The accountants still did nothing.

In October or November 2017, Mr Nowroozi asked his daughter to contact HMRC to ask what was happening with the appeal and, we are told, was “shocked” to discover that there was to be no hearing as the appeal had been struck out.  He appointed new accountants, but they told him that an application for reinstatement was a legal matter.  Nr Nowroozi with the help of his daughter, therefore himself applied to the Tribunal for the appeal to be reinstated.

It looks as if Mr Nowroozi was badly let down by his accountants.  That is clearly not HMRC’s fault.  We all know that HMRC are sympathetic and understanding with vulnerable customers like Mr Nowroozi.  It is only a few weeks ago that they told the Treasury Select Committee, “HMRC recognises that support needs can be complex and customer needs can change due to increasing or difficult events (such as …illness …).  HMRC is building on the experience and successes of the Extra Support Service in the Customer Service Group to determine how best to support customers who are undergoing compliance checks”.

Well, Mr Nowroozi was not undergoing a compliance check, but I thought I should quote that to illustrate what HMRC want MPs to believe in relation to their understanding of vulnerable people like Mr Nowroozi.  So how did they support him?  After 50 plus years in tax, I suppose I ought to know by now that the platitudes HMRC wheel out for MPs bear little relationship to the real world.  Naturally (for HMRC) they opposed his application.

Whether or not to admit late appeals is at the discretion of the Tribunal.  They exercise this discretion by:

1.      Establishing the length of the delay.

2.      Establishing the reasons for the delay.

3.      Bearing in mind the importance of the need for litigation to be conducted efficiently and at proportionate cost and for statutory time-limits to be respected, considering “all the circumstances of the case”.

The Tribunal decided that “although the starting point is that Mr Nowroozi’s appleal should not be reinstated, having regard to all the circumstances I am satisfied that on balance it should”.  The circumstances the Tribunal thought relevant were:

a)      in the light of Mr Nowroozi’s health, it was reasonable for him to rely on his accountants,

b)      although the Tribunal copied other correspondence to Mr Nowroozi, it did not send him either the “unless Direction” or the strike out decision,

c)      the Tribunal did not see suing the accountants as a practical alternative to reinstating his appeal, and

d)      as Mr Nowroozi will primarily rely on documentary evidence in support of his appeal, any prejudice to HMRC by the reinstatement of the appeal is outweighed by the injustice of denying him the opportunity of putting his case to the Tribunal.

As the appeal is clearly important to Mr Nowroozi, I hope that my readers will agree with me that this is a fair and reasonable (and humane) decision.  I like tax cases where everyone can live happily ever after!

Sorry, that juxtaposition of “everyone” and “happily” is a slip of the pen.  Why do we know about poor Mr Nowroozi?  The Tribunals do not normally issue decisions in relation to such applications.  The answer is that not everyone seems to be happy.  A party who wishes to appeal a decision needs to ask for a formal written decision in order to do so.  And that is what HMRC did.

So it appears that whatever I (and hopefully you) may think, we, as taxpayers, through our representatives HMRC, are very unhappy indeed.  We think that Mr Nowroozi should shut up and pay his tax.  We are going to do all that we can to thwart this sick man’s wish to have his day in Court.  We are prepared to spend whatever it takes.  Money is no object to us, because it comes out of our taxes.  I hope you feel great about that.  I don’t!

ROBERT MAAS