‘P60 error’ mislead taxpayer

01 December 2019

A first-tier Tribunal (Tax) has refused the taxpayer’s appeal against a penalty assessment of £694.15 imposed by HM Revenue & Customs (HMRC) for a prompted deliberate inaccuracy in his tax return for the tax year ending 5 April 2017 (Ringo Scheithauer v Commissioners for HMRC http://bit.ly/32LqF84). The penalty was obtained by multiplying the potential lost tax revenue of £4,627.73 by 15% (the minimum penalty), reflecting HMRC’s view of how much assistance the appellant gave in the enquiry.

In November 2017, HMRC opened an enquiry into the appellant’s 2016/17 self-assessment return. HMRC established that the figure shown in the return – taxable pay of £167,605.48 – was only part of the total income. He had additionally received £139,116.92 income from Dunhill Pontefract PLC for the period 5 April to September, along with employment benefits of £6,699 which had not been included in the tax return.

Although the appellant agreed the figures of income and benefits in kind, he stated that he had only repeated the figures shown in the P60 certificate and that he could not understand why the employer did not include all of his pay.

However, the reason the P60 certificate did not include earnings from April to August 2016 was because in September 2016 payroll arrangements were moved in-house, whereas previously these had been outsourced to external accountants. In consequence, the appellant’s pay as you earn reference changed from ‘567/VZ 53163’ to ‘567/A6283’. The form P45 which Dunhill received from the accountants had the appellant on a month one basis tax code throughout the period April to August 2016 and therefore the earnings were not included.

HMRC concluded in its review that the appellant did not take reasonable care when making his 2016/17 self-assessment return and as such the penalty was issued in accordance with the legislation. n