Policy News Journal - 2016-17

The Chartered Institute of Payroll Professionals ……………………………………………………………Policy News Journal

Ms Sobczyszyn, a teacher, took convalescence leave provided by a Teachers' Charter and was unable to use her annual leave. The school said that leave had been used during convalescence. A reference was made to the ECJ on the compatibility of the domestic Polish Teachers' Charter with the Working Time Directive 2003/88/EC. Article 7(1) provides four weeks' annual leave for every worker which is a fundamental tenet of EU social law. Only on termination can payment be made in lieu. Annual leave accrues during sick leave, Stringer . If scheduled leave coincides with sickness, a worker can designate a different time to take leave, Pereda . The purpose of paid leave is rest and relaxation. Sick leave is for recovery from illness, it is not rest; annual leave can be rescheduled on recovery, ANGED .

Whether leave has been scheduled or booked makes no difference: if sickness prevents annual leave, workers must be able to use annual leave at a later date.

With thanks to Daniel Barnett’s employment law bulletin which provided the details of this case.

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Daily penalties: HMRC victory in Court of Appeal 1 August 2016

The Court of Appeal has confirmed that HMRC had correctly imposed daily late filing penalties under Schedule 55 Finance Act 2009. This decision is important as there have been a number of cases put on hold awaiting its outcome. The case Donaldson v HMRC [2016] EWCA Civ 761 concerned whether the daily penalties issued by HMRC in respect of the taxpayer’s 2010/11 self-assessment return were valid.  The taxpayer failed to file a paper return by 31 October 2011.  In December 2011 he was sent a computer generated reminder stating he was too late to file a paper return without paying a penalty, and that daily penalties would apply if he failed to file by 31 January.  He still did not file his return, and received a further reminder on 6 January, again stating that daily penalties would apply if the return was over 3 months late.  The taxpayer finally filed his return on 1 May 2012 and received an assessment for fixed and daily penalties.

The First Tier Tribunal (FTT) previously found that, as HMRC had not given a notice to the taxpayer specifying the date from which the daily penalties applied, those penalties were not valid.

The Upper Tribunal (UT) however subsequently overturned that decision and found that the daily penalties had been correctly imposed.

The Court of Appeal has now upheld the decision of the UT, finding that:  A generic policy decision taken by HMRC was sufficient to satisfy the requirement of para 4(1)(b) that HMRC must ‘decide’ that a penalty is payable: the decision does not have to be made on a taxpayer by taxpayer basis.  The notices given by HMRC to the taxpayer were sufficient: all they had to do was inform the taxpayer that, if his return was 3 months late, daily penalties would be charged for up to 90 days. The UT had observed that HMRC had probably not satisfied its obligations under para 18 when issuing the penalty assessment, but it did not consider this in detail the issue was not under appeal. The Court of Appeal did go onto consider this point, again finding in favour of HMRC:  The penalty assessment, in not stating the period in which the daily penalties applied, did not satisfy the requirements of para 18(1)(c).  However, the taxpayer could not have been in doubt as to the period over which he incurred a liability based on the reminders received.  The omission from the assessment was therefore one of form and not substance and the taxpayer was not misled or confused by it.  This meant that, per the override in s114(1) TMA 1970, the omission did not affect the validity of the assessment.

The taxpayer’s appeal was therefore rejected.


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