CH173000 - Special reduction: case law on the meaning of special circumstances

The Upper Tribunal’s comments in the case of Barry Edwards, whilst representing findings on the precise facts of that case, nevertheless provides authority on the subject of special circumstances.

In its judgement the UT said that the meaning of special circumstances should not be given a restrictive interpretation. Special circumstances can therefore include any factor which means that the decision to charge a penalty at the level determined by statute would not be right in that specific case.

The UT decided that, to be special any particular circumstance may or may not be specific to the individual taxpayer but it must be relevant to the issue under consideration. If relevant, the circumstance must be sufficiently special that it is then right to reduce the penalty below the amount otherwise provided for in law.

A detailed extract of the UT’s judgement in Barry Edwards is available at CH175230 for information if required by review officers and members of the appeals teams. In the Upper Tribunal case of Matthew Harrison, the judge commented that Edwards ultimately confirmed that HMRC, and where appropriate the FTT, simply need to focus on the term used in the legislation. Beyond being relevant to the issue under consideration, the circumstances must be “special” – no more and no less. There is nothing special about the term “special”. Although the test HMRC used was expressed in different

terms, we consider it reflected the substance of the applicable test. HMRC referred to the circumstances being “uncommon or exceptional”. Those terms, as pointed out by the FTT in Advanced Scaffolding, did not “really take the debate any further”. In other words those terms did not add anything; neither did they detract from the term “special”

Thus, the use of the term “uncommon or exceptional” does not necessarily mean that HMRC decision is flawed.