How many of you have actually looked at the drachonian penalty regime attached to the Construction Industry? Quite frankly if you’re sad enough to sit down and work out the completely disproptionate level of penalties that can be charged for minor infringements then it is absolutely staggering that this regime was allowed in the first place but a challenge is going to be heard because of the case of  SKG (London) Ltd v HMRC. Judgement was handed down on 3 December 2009, in which the Tribunal for the first time analysed the new scheme in light of safeguards in European Law which protect against arbitrary or disproportionate penalties.  The Judges in the case ruled that: “…the Tribunal is left in doubt as to whether or not the statutory provisions for the penalty for late filing of a return…satisfy the requirements of the Human Rights law principle of proportionality”.

Neither side appointed Counsel for the hearing, so the Tribunal has not yet had the benefit of detailed legal submissions and has adjourned its final decision until further legal arguments have been considered – this should be sometime between March and July 2010.  So, watch this space, as it seems that HMRC could be in for a difficult time and the entire new late filing penalty regime could be under threat.