There have been a number of recent cases in the taxpayers favour regarding the meaning of ‘reasonable excuse’ in the context of penalties.
The case of Candlestick Company (TC1573), involved the late submission of a partnership return. Key point to this case was that the taxpayers had tried to correct the situation and had sought advice regarding their tax affairs from an accountant.
The case of Dudman Group Ltd (TC1608) involved penalties in respect of the late payment of PAYE by the employer company.
The taxpayer argued that they had suffered financially as a result of 9 of the company’s debtors going into administration and cash flow problems due to their bank changing its credit terms.
HM Revenue and Customs argued that inability to pay is not a reasonable excuse. However the Tribunal found in the taxpayers favour and noted the recent economic climate has put a lot of pressure on UK businesses.
These cases show the importance of considering making an appeal against penalties imposed by HM Revenue and Customs where there are mitigating factors in play.
