Written by Richard Rowell
Published on January 12, 2012

If you have received penalties for late filing of P35's the following may be of interest. In the recent case of Hok Limited v HMRC a P35 penalty has been overturned on the basis that HMRC waited several months before issuing penalty notices.

The facts in the case were that there was a genuine belief that they did not need to submit a 2009/10 P35 and only received notice in September that there was a failure to submit when a fine for £400 hit their desk. Because of the timing the fine actually went up to £500 before the P35 could actually be submitted.

Judge Geraint Jones QC stated "In our judgement the appellant is entitled to rely upon the common law duty of a public body to act fairly not just in its decision making process but also in adminstering its statutory powers. We are in no doubt that such a body does not act fairly where it deliberately desists from sending a penalty notice, for four months or more, knowing that the effect will be to impose a minimum penalty of £500 upon somebody whose sin may be no more than oversight or forgetfullness"

Other comments in this case from the judge were that it would be a simple matter for HMRC to program its computers to send out P35 penalty notices in May rather than September to avoid fines piling up.

This is a common bone of contention with HMRC. Their systems clearly show who hasn't filed a P35 by 20 May. Delays in issuing fines which run at £100 per 50 employees per month stack up very quickly and receiving notification in September / October is unacceptable particularly when there are genuine reasons for the omission or delay.

Be warned though HMRC are appealing the decision!