Two recent tax cases heard by the First-Tier Tribunal show that the courts continue to interpret the phrase “reasonable excuse” more generously that HMRC internal guidance allows for.
In S Taylor, a taxpayer was somewhat surprisingly found to have a reasonable excuse as he had appointed an agent and relied upon them to deal with the self-assessment form. HMRC guidance is explicit that relying on a third-party is not a reasonable excuse, however, the Tribunal felt this to be incorrect in these specific circumstances.
The taxpayer delivered his papers to the agent in sufficient time but the agent had been busier than usual and had missed the taxpayer’s return. The agent had not told the taxpayer this, and the Tribunal therefore felt that he had taken reasonable steps to file on time.
Another case showed a partial success for the taxpayer in Perfect Permit Ltd t/a Lofthouse Hill Gold Club. HMRC had levied penalties in relation to late employer annual returns for 2008/09 and 2009/10. The 2008/09 return was submitted more than a year late, whilst the 2009/10 return was filed 47 days late by the taxpayer’s new agent.
The Tribunal found that the failure of the previous agent to submit their returns did not constitute a reasonable excuse and it was up to the company to seek redress from the previous agent. However, the new agents had encountered difficulty registered with HMRC. The tribunal agreed that, had HMRC registered the new agents promptly, the return for 2009/10 would have been submitted on time. As such, the delays caused by HMRC did constitute a reasonable excuse.
We would suggest that taxpayers seek advice where they feel that HMRC are being unreasonable with regard to reasonable excuse claims. Eaves and Co would be delighted to help and would love to hear from you.