Reasonable excuse cases continue to be found in favour of taxpayers, casting further doubt on HMRC’s internal policy regarding Reasonable Excuse (see our earlier post – ‘Death, disease or disaster’).
The trend continued in the P35 case of Eclipse Generic Ltd v HMRC. The taxpayer claimed to have submitted their P35 online in April 2011 and stated they had received a confirmation from HMRC.
In August 2011, the taxpayer discovered that HMRC had not received this document and were levied with a late filing penalty on submitting the return in August.
The tribunal found that it was not possible for HMRC to accept a document twice, and as such it was a fact that the original return had not been received by HMRC. However, they also found that due to system updates taking place at the time of the original submission it was possible there had been a fault, with the taxpayer incorrectly receiving an acknowledgment.
The tribunal were unable to quash the penalty on the grounds of fairness but stated that the circumstances meant that the taxpayer did have a reasonable excuse, and allowed their appeal.
It is interesting that the taxpayer had to take such a case to tribunal where it was found that the fault lay with HMRC’s system. However, it does show the continued importance of challenging HMRC penalties and interpretation where a genuine excuse exists.