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- Re: Equal treatment for all taxpayers??
on 15/5/2026, 18:14:36, in reply to "Re: Equal treatment for all taxpayers??"
HMRC’s approach to penalties angers accountants as ‘carelessness’ penalty regime becomes ‘taxation on genuine mistakes’.
Accountants at leading firm Blick Rothenberg are calling for stronger clarification from HMRC on its use of penalty regime around failure to take reasonable care after former deputy PM Angela Rayner escapes penalty sanction, saying ‘ordinary taxpayers should not be held to higher standard than politicians’.
Sean Drury, head of tax at Blick Rothenberg, said: ‘Angela Rayner’s declaration that she has been “cleared” would indicate that HMRC concluded no penalty was due in respect of the well-publicised issues to do with stamp duty land tax.
‘This is surprising, as it is unclear why she was not regarded as having failed to take reasonable care given HMRC’s own guidelines on what counts as “carelessness”. Politicians should not be held to a lower standard than ordinary taxpayers are by HMRC in this regard.’
This view was echoed by tax expert Dan Neidle, founder of Tax Policy Associates. ‘That is a surprising outcome. We said last September that, on the facts as publicly stated, Ms Rayner was almost certainly “careless” within the meaning of Schedule 24 of the Finance Act 2007, and that a penalty of around 20% (about £8,000) was the likely outcome,’ said Neidle.
‘We don’t understand why HMRC reached a different conclusion.
‘We have to say at present we don’t know why HMRC accepted Ms Rayner was not “careless”. On the facts as they have been publicly stated, that conclusion seems generous.’
Glen Huxter, an ATT Fellow and independent employment tax specialist, sees ‘more mileage in this case’ after HMRC’s decision.
‘It’s been publicly noted that Rayner was advised to seek professional advice and did not do so,’ Huxter said.
‘Existing law around carelessness / negligence is whether the taxpayer took reasonable steps that a prudent person would take. How can it be that not to seek professional advice when to do so (and by another professional) meets this threshold? (Accepting that there might be pertinent facts that are not public, eg the penalty is suspended).
‘The public interest and scrutiny in this case may gather pace and that HMRC are forced to reconsider; especially as this case will no doubt be used in defence at FTT hearings where careless/ negligent behaviour is under appeal. This also raises the matter of fairness with which HMRC treats all taxpayers.’
Call for penalty review
In light of HMRC’s decision, Drury is calling for a wholesale review of the tax penalty regime as it has become a form of ‘taxation on genuine mistakes’.
‘Taxpayers who are trying to comply with very complex rules should not be penalised. Getting complex things wrong without intent may still be “careless” but it should not be automatically punishable by a penalty,’ said Drury.
‘We are seeing increasing cases where HMRC are taking a very hard line in imposing penalties for “carelessness” with taxpayers, but apparently not with politicians.’
The tax tribunals are filled with disputes over HMRC tax demands and assessments, where the tax authority asserts taxpayers have made ‘deliberate’ mistakes in their tax returns to avoid paying tax.
The overly complex tax code does not help the situation with arcane rules which not only individual taxpayers but also businesses struggle to interpret.
There are also nuances within HMRC’s interpretation of its own penalty regime.
Paul Noble, head of tax dispute resolution at Blick Rothenberg, said: ‘HMRC defines “careless” as a failure to take reasonable care.
‘Being careless generally results in a penalty being charged whereas taking reasonable care does not. But the bar for reasonable care is set high and is subjective.
‘It depends on the complexity of the circumstances, the person’s own knowledge and whether they have taken appropriate advice.
‘Even if advice is taken it is not always easy to demonstrate reasonable care as it depends on what the advice was taken on and whether the person was clear in their instructions and facts to their adviser.
‘HMRC’s official guidance says that while each person has a responsibility to take reasonable care, it has to be viewed in the light of that person’s abilities and circumstances.’
Despite the highest tax burden in 50 years with more taxpayers being dragged into higher rate 40% tax and facing ever more complex tax scenarios, there is little appetite on the part of government or HMRC, which is chaired by a Treasury minister, to revisit the penalty regime.
No doubt there will be a further surge in penalties once the grace period for the complex quarterly reporting requirements of Making Tax Digital for Income Tax comes to an end next tax year. For now MTD phase one users can breathe a sigh of relief as no penalties are being charged in year one until 6 April 2027.
But back to the Rayner tax issue, Drury said: ‘Regardless of HMRC’s decision in her case, I would hope that following what has clearly been a complex and stressful period that Angela Rayner will become a clear advocate for change in HMRC procedures where taxpayers are not treated as “guilty until proven innocent” and that the default position of getting complex things unintentionally wrong is automatically punishable by a penalty regime.’
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