2020 Tax Protection has seen a number of cases recently where HMRC has been seeking penalties on relatively small amounts of tax under the new regime. There are disagreements over whether an add back is as a result of innocent error or a failure to take reasonable care.  Problems arise when the level of penalty is in the low hundreds.  HMRC is aware the cost of fighting the penalty at tribunal is very likely to outweigh the amount of the penalty.

Whilst accepting the economic realities of life there a a couple of points to bear in mind. Firstly, we are reminded of the need to consider penalties at the outset.  Whenever any item emerges we should get out defence and arguments in first. Secondly, we wonder what would happen if all of these cases were listed for hearing?  Would HMRC really want to spend their own resource on collecting such small penalties? Or would they have to take a more pragmatic approach?