Sudden death of your accountant is not "reasonable excuse"

Sudden death of your accountant is not ...

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I have a Tribunal case up and coming.

A client with one employee and a PAYE/ NI bill of £80 had her previous accountant die suddenly in April 2010.  Due to HMRC incompetence in responding to my request, and my client's request to sort out a problem with the Accounts Office reference and enable me to register as her accountant ( 5 letters, 10 phone calls and 1 formal Complaint later) it took 10 months to file the return.

By that stage they had hit my client for £800 in fines and put the debt into the hands of the Distraint Department, saying we had not responded to letters despite the five letters we had on file by that stage.  I appealed this down to £156.  I am going to the Tribunal for the other £156.  Note my client is aged 66 and of poor health, so this aggressive approach was really unacceptable.

Although they accept that sudden bereavement is a reasonable excuse, apparently such bereavement does not include the unexpected death of the tax agent during PAYE submission season.  Note the agent was a sole trader, so until I had access to what had been paid online - which took ages due to their lack of proper response to sorting out the Accounts Office number problem - I could not know what the correct End of Year numbers were.

It staggers me that these people can carry on pursuing this matter, they should be held more accountable for this sort of waste of taxpayers money.  Note that a professional response to my very first letter in August 2010 would have meant I'd have filed by September 2010 at the latest.

Replies (33)

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By User deleted
20th Sep 2011 19:56

HMD Response International

Although the circumstances are not identical, I would expect the Tribunal to refer to that case, with a favourable outcome. You should also pursue HMRC for costs.

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By thisistibi
20th Sep 2011 19:57

HMRC views on reasonable excuse

HMRC have never accepted that agent failure is a reasonable excuse for a taxpayer.  I think one reason for that is that it'd be very easy for agents to start holding their hands up and saying "yep sorry my fault!" to get their clients out of penalties - it'd be all too easy.

However, recent Tribunal cases have clearly shown the gap between HMRC practice and the court's view on reasonable excuse.  HMRC are losing case after case, especially on the recent P35 case.  I think you have a strong position and I hope HMRC learn from these lost cases - so far they don't seem to have changed their practice.  Reasonable excuse is not intended to be as narrow as they define it.

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By The Innkeeper
20th Sep 2011 20:02

remember

Reasonable excuse is not defined in the tax legislation and therefore the ordinary meaning must be applied to the words

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By Monty Python
20th Sep 2011 22:34

Bedtime reading :)
 

Take a look at the following cases -

N A Dudley Electrical Contractors Limited V Hmrc

Anthony Leachman T/A Whiteley And Leachman V Hmrc

 

Ballysillan Community Forum V Hmrc

 

You might find the case of  Jussila V Finland – European Court interesting too as it sets the principal.

 

 

 

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By taxhound
21st Sep 2011 06:52

@thisitibi

"HMRC have never accepted that agent failure is a reasonable excuse for a taxpayer."

This did make me laugh!  I guess that if you die you have failed, but it is hardly likely to be deliberate.

Based on recent cases re reasonable excuse I hope HMRC will be thrashed in this one.  Please let us know what happens.

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By Monty Python
21st Sep 2011 10:58

What "reasonable excuse" do HMRC have for being so stupid?

I bet the previous accountant didnt consider it "reasonable" that he dropped dead either.

Sometimes you really wonder what planet HMRC live on and what they use to fill the gap between their ears.

From the facts you outline the Tribunal should find in your client's favour, but if it doesn't dont give in - take it to a County Court. The amount involved means it would be a small claims case and I doubt their is a District Judge in Britain so lacking in common sense that they wouldnt slap HMRC down for being so stupid and insensitive.

 

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Replying to earlsfield:
By BillyBob
21st Sep 2011 11:19

Pot calling kettle, pot calling kettle, come in kettle....

Monty Python wrote:

Sometimes you really wonder what planet HMRC live on and what they use to fill the gap between their ears.

 

 

I'm sure they probably say equally pleasant things about you.....

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Replying to The Black Knight:
By Monty Python
21st Sep 2011 18:40

.

BillyBob wrote:

Monty Python wrote:

Sometimes you really wonder what planet HMRC live on and what they use to fill the gap between their ears.

 

 

I'm sure they probably say equally pleasant things about you.....

 

 

 

Big difference - I have 47 cases that have gone to court (not Micky Mouse tribunals) against HMRC -  and 47 wins.

How anyone could possibly defend their actions in this case as outlined by the OP beggers belief.

.

 

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Replying to The Anony Mouse:
By Hans Zarkov
21st Sep 2011 19:29

?

Monty Python wrote:

BillyBob wrote:

Monty Python wrote:

Sometimes you really wonder what planet HMRC live on and what they use to fill the gap between their ears.

I'm sure they probably say equally pleasant things about you.....

Big difference - I have 47 cases that have gone to court (not Micky Mouse tribunals) against HMRC -  and 47 wins.

How anyone could possibly defend their actions in this case as outlined by the OP beggers belief.

.

I can't see anyone defending HMRC's actions in this case - can you?

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Replying to The Anony Mouse:
By BillyBob
21st Sep 2011 21:12

Read the comment

Monty Python wrote:

BillyBob wrote:

Monty Python wrote:

Sometimes you really wonder what planet HMRC live on and what they use to fill the gap between their ears.

 

 

I'm sure they probably say equally pleasant things about you.....

 

 

 

Big difference - I have 47 cases that have gone to court (not Micky Mouse tribunals) against HMRC -  and 47 wins.

How anyone could possibly defend their actions in this case as outlined by the OP beggers belief.

 

 

 

Well for starters I'm sure they've probably won more than 47 cases (only 47 - in your vast experience, you do surprise me) and secondly I wasn't defending their actions but commenting on your less than polite remarks about them.

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Image is of a pin up style woman in a red dress with some of her skirt caught in the filing cabinet. She looks surprised.
By Monsoon
21st Sep 2011 11:35

Agent failure can be a reasonable excuse

Firstly: Good luck Mr Mischief, what an utter farce and disgrace.

Secondly:

 

With reference to the case of Mrs A M Rowland v The Commissioners For Her Majesty’s Revenue & Customs (2006), the Special Commissioner stated:-

 

“I conclude that in the direct tax context reliance on a third party can be a reasonable excuse” and the reasoning behind the decision was: - 

"It was reasonable for Mrs Rowland to rely on her then accountantIt was this reliance that led to the underpaymentThis was the excuse for making the underpayment and, as the reliance was reasonable, the excuse was at first blush reasonableReliance on a third party can be a reasonable excuseMrs Rowland has a reasonable excuse for not paying the tax on timeShe had this reasonable excuse throughout the period of default"

Ah, I got that from Stephen Kendrew, here

https://www.accountingweb.co.uk/anyanswers/p35-filed-14-months-late-ex-a...

 

It works, I've used it.

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By taxhound
21st Sep 2011 12:35

Of course

It was d****d unreasonable of the accountant to die so it can't possibly be a reasonable excuse.

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By George Attazder
21st Sep 2011 18:04

I'm the dissenting minority then!

I agree that the expiration of the previous agent at about the time the return was due to be filed constitutes reasonable excuse for not filing that return by the deadline.

That excuse hasn't continued throughout the period of default though.

You're now saying that the reasonable excuse since August 2010 is the failures on the part of HMRC.   The question for the tribunal is whether a reasonable agent exercising reasonable diligence could and would have filed a return (of some description) sooner, despite the lack of cooperation from HMRC.  You need to consider it too, as they could lay some culpability at your door.

5 letters, 10 phone calls and 1 formal Complaint letter seems to me to be a rather onerous way to get rid of an £80 P35.  Maybe I'm just a grumpy old [***] though.

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PAH Accounting Devizes Wiltshire
By Phil Hendy
21st Sep 2011 19:20

Also in the minority

I'm kind of with George.

As the accountant was presumably a Sole Practitioner surely there should have been a continuity agreement put in place? I have to have this as part of my ACCA practising certificate renewal.

Whilst there is sympathy for the agent that has passed away and I appreciate an appeal in the short term the facts are they should have had something in place in case this happens.

 

On that topic, has anyone ever had to take on clients from one of these arrangements or indeed, after falling ill perhaps, passed on their clients in this arrangement?

 

Dare I spark up the qualified vs unqualified debate with this as an example?

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Replying to downfieldpay:
By Hans Zarkov
21st Sep 2011 19:30

Don't do it

philhendy wrote:

Dare I spark up the qualified vs unqualified debate with this as an example?

I wouldn't if I were you

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Chris M
By mr. mischief
21st Sep 2011 20:32

I agree the sole practitioner should have had an agreement in place.  I am a sole practitioner, I have a quid pro quo with another practice 50 miles away.  We cover each other's urgent cases whilst we're on holiday and I'm sure if I drop down dead she'd sort out urgent stuff for clients.

Although the deceased accountant was qualified she was something of a recluse.  Good quality work, though - some of her stuff puts the handovers I get from a local, National award winning largish firm of Chartereds to shame.

However, the arrangements - or lack of them - in place from the accountant are hardly the client's fault.

I've won lots of new clients so am something of an expert at getting around all HMRC's silly systems when you don't quite have the right info. - for example I have had 2 separate clients where the postcode on the database was one never lived at or operated from, and another where it was blank and - you've guessed it! - Mr. Jobsworth would not add the postcode to the address as this was "not in our procedures".

In this case it turned out the Accounts Office reference my client had was one digit wrong.  Online, of course, there is no way of knowing whether you have the right references, which piece of info. the database does not like, whether the database has duff info. in it.  My experience with getting paper 64-8s sorted out which are in the "difficult pile" where some information does not tie up with the database is not inspiring.

So it's hard to see where I could improve.  If this aspect of the case is challenged, I will cite another 20 where I managed to get sorted out OK despite needing to get the database adjusted.  This one had me beat - in those other cases the client was able to help me out by calling them up.  We tried this but I wasn't confident due to the age and health of my client and so it transpired, both HMRC and herself ended each call frustrated with no progress made.

 

 

 

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By Monty Python
21st Sep 2011 22:46

Polite ?

BillyBob

Well for starters I'm sure they've probably won more than 47 cases (only 47 - in your vast experience, you do surprise me) and secondly I wasn't defending their actions but commenting on your less than polite remarks about them 

 

 

Actually HMNRC have an appalling track record in court, losing something like 80% of their cases the last time I saw any figures on it.

47 is not a bad number considering it's not something I usually do for myself, I have a collegue far more experienced in tax cases.

As for "being less than polite" about HMRC - why should anyone be polite about the most incompetent apology for an organisation that exists. Ome which even the treasury select committee had to agree is unfit for purpose, and, one which the select committee found had deliberately lied to parliament for 2 years. Just what have they, as an organisation, done to deserve anything other than contempt? 

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Replying to P.J.and Co:
By Hans Zarkov
22nd Sep 2011 08:14

100%?

Monty Python wrote:

Actually HMNRC have an appalling track record in court, losing something like 80% of their cases the last time I saw any figures on it.

47 is not a bad number considering it's not something I usually do for myself, I have a collegue far more experienced in tax cases.

Would you plese PM me your details, as I think we should be engaging you next tme we have a case against HMRC. HMRC lose "something like 80%" of cases yet you - not even the most experienced member of your firm - can claim 100% success? We know, and use, a number of high-profile QC's  -  a couple in particular that are renowned for their successes against HMRC - yet not one of them could claim 100% success.

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Replying to Roland195:
By Monty Python
22nd Sep 2011 09:11

.

Hans Zarkov wrote:

Monty Python wrote:

Actually HMNRC have an appalling track record in court, losing something like 80% of their cases the last time I saw any figures on it.

47 is not a bad number considering it's not something I usually do for myself, I have a collegue far more experienced in tax cases.

Would you plese PM me your details, as I think we should be engaging you next tme we have a case against HMRC. HMRC lose "something like 80%" of cases yet you - not even the most experienced member of your firm - can claim 100% success? We know, and use, a number of high-profile QC's  -  a couple in particular that are renowned for their successes against HMRC - yet not one of them could claim 100% success.

 

 

 

Actually I am the most experienced. I simply find cases against HMRC boring and have bigger fish to fry. Being semi retired does give you the ability to pick and choose how you spend your time and I choose not to spend more than is neccesary dealing with insignificant tax men.

Incidently, whoever you use should vet their cases more carefully, if you dont win a case that indicates that you should have settled the matter before going to court - clearly assessing the strengths and weaknesses of a case is, or should be, the first step.

 

 

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Replying to Roland195:
By Hans Zarkov
22nd Sep 2011 10:10

?

Monty Python wrote:

Actually I am the most experienced. I simply find cases against HMRC boring and have bigger fish to fry. Being semi retired does give you the ability to pick and choose how you spend your time and I choose not to spend more than is neccesary dealing with insignificant tax men.

I was referring to experience in tax cases, as were you.

Monty Python wrote:

Incidently, whoever you use should vet their cases more carefully, if you dont win a case that indicates that you should have settled the matter before going to court - clearly assessing the strengths and weaknesses of a case is, or should be, the first step.

 

That makes absolutely no sense whatsoever. (Though I'm sure the QC's that I know would be very grateful for that valuable advice from you.)

In every case that I know of, both parties proceed to court with an expectation of victory.  If every case were to proceed along the lines of your suggestion, not a single case would ever make it to court, because the weaker party would have established that it would not be worth pursuing. But what you are saying is that you only take to court only those cases that you know with certainty you will win - which makes the claim of a 100% success rate rather hollow.

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By Fidget
22nd Sep 2011 07:15

Mr Mischeif

I dont know why were discussing court cases as Ive heard that HMRC dont even bother turning up to those, and you clearly mentioned a tribunal in your opening post. Ranting about HMRC and boasting about our successesmake us feel better but they dont really help you.

Monssons advice is excellent and has given you much good ammunition in detail. If you have documents to prove that much of the delay was due to HMRC, and you can obviously prove the death of the accountant, then you should be on safe ground.

Good luck and I hope you will let us all know the result.

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By Monty Python
22nd Sep 2011 10:47

@ Hans

 

I'm sure I probably know the QC's you know, and assuming they are intelligent honest chaps, I have no doubt they will confirm my views. Of course there is never a 100% guarantee of success, but, any barrister worth his salt will always assess the chances of success of any case presented to him and advise accordingly.

In criminal matters it is obviously well worth defending a case with perhaps only a 50% chance of success, it rather depends of the accused's willingness to plead guilty in the hope of a reduced sentence. Criminal cases are almost always unpredictable, and of course far more than mere money is usually at stake.

But, in civil matters, the issue is far more clear cut. As a result of changes a few years ago to the pre action protocol, and the ever increasing case management by the courts, parties are now expected to have made every effort to setle before resorting to court action. Indeed it is quite common for the courts to order parties to seek independant arbitration before allowing the matter to go to trial.

This means, of course, that cases actually reaching the court are almost always brought after failed arbitration, because one side or the other refuses to accept the view taken by the arbitrator.

Therefore, when reassessing the issues before trial all the evidence from both sides is already disclosed, all the arguments have been aired during arbitration, and of course, the opinion of the arbitrator is known.

The fact is that it is extremely rare for the courts to  decide differently to the arbitrator, so before trial, unless some compelling new evidence has come to light, the result is almost a forgone conclusion.

In cases with HMRC the court will expect the Revenue appeals procedure to have been exhausted first, and therefore it is not difficult to see which way any subsequent trial will go, unless of course there are compelling reasons (usually under Human Rights legislation) to challenge HMRCs findings.

This of course is why I find civil cases so mind numbingly boring and leave them as far as possible to others.

I find my pro bono work, especially that which I do with a collegaue in the States, to be far more stimulating, and as money is no longer an issue, I see no reason why I should bore myself any more with meaningless cases when my work with Amnesty International and other organisations is so much more stimulating and important.

 

 

 

 

 

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Replying to petersaxton:
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By thisistibi
22nd Sep 2011 12:02

But

Monty Python wrote:

I find my pro bono work, especially that which I do with a collegaue in the States, to be far more stimulating, and as money is no longer an issue, I see no reason why I should bore myself any more with meaningless cases when my work with Amnesty International and other organisations is so much more stimulating and important.

Stimulating and important.... but ultimately unsuccessful it would seem, considering recent events.

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Replying to ShirleyM:
By Monty Python
22nd Sep 2011 12:13

-

thisistibi wrote:

Monty Python wrote:

I find my pro bono work, especially that which I do with a collegaue in the States, to be far more stimulating, and as money is no longer an issue, I see no reason why I should bore myself any more with meaningless cases when my work with Amnesty International and other organisations is so much more stimulating and important.

Stimulating and important.... but ultimately unsuccessful it would seem, considering recent events.

 

 

Not always unsuccesful. I wonder which recent events you refer to, one was with my collegue in the States (the execution of Troy Davis) and the other was indeed opposed by Amnesty (the execution of 17 year old Alireza Molla Soltani in Iran.) 

The problem being that in both cases you are dealing with two of the three most barbaric regimes in the world (the 3rd being China).

Iran, the USA & China, routinely butcher their own citizens in the name of justice whilst having some of the most inept and corrupt judicial systems in the world. However, there are successes, and international pressure will eventually have an effect, although in Irans case it is clear that as a prerequisit regime change will be neccesary.

 

  

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By Hans Zarkov
22nd Sep 2011 11:02

Thanks

For that expansive explanation.

But it (the third last paragraph in particular) only reinforces my view that a claim of "47 wins out of 47 against HMRC" is rather meaningless.

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Replying to chatman:
By Hans Zarkov
22nd Sep 2011 11:20

Enough said

Monty Python wrote:

No -- it actually demonstrates the stupidity (or maybe arrogance) of HMRC in contesting cases they should not. 

 

I agree - that is another way of spinning it.

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By Monty Python
22nd Sep 2011 11:25

.

Hans Zarkov

I agree - that is another way of spinning it. 

 

 

 

There is no need to "spin" such obvious facts.

 

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By Hans Zarkov
22nd Sep 2011 11:57

Confusion

Don't confuse fact with opinion. It may be a fact that you have won 47 out of 47 cases against HMRC. It is a matter of opinion as to the significance of that claim.

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By Monty Python
22nd Sep 2011 12:04

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Oh I don't confuse fact with opinion.

It is a fact that your opinion seems designed to be inflammatory. It is my opinion that you seem to be being deliberately offensive. It is also my opinion that you have some ulterior motive for being so, and it is a fact that I will therefore ignore your future posts as in my opinion they are without merit and made for dubious reasons.

 

 

 

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Replying to chatman:
By Hans Zarkov
22nd Sep 2011 12:22

You're doing it again

Monty Python wrote:

Oh I don't confuse fact with opinion.

It is a fact that your opinion seems designed to be inflammatory.

No - it is your opinion that my opinion seems designed to be inflammatory (rather odd, though - my opinion is what it is, how can it possibly be inflammatory? How I express that opinion might be considered inflammatory but that is a different matter altogether)

Monty Python wrote:

It is my opinion that you seem to be being deliberately offensive. It is also my opinion that you have some ulterior motive for being so, and it is a fact that I will therefore ignore your future posts as in my opinion they are without merit and made for dubious reasons.

 

No argument, you're entitled to your opnions, no matter how offensive I might find them, just as I am to mine - and since facts are indisputable I do not expect a response to this post so the matter can now be considered closed.

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By Monty Python
22nd Sep 2011 12:25

.

Hans Zarkov

No argument, you're entitled to your opnions, no matter how offensive I might find them, just as I am to mine - and since facts are indisputable I do not expect a response to this post so the matter can now be considered closed 

 

 

 

I'm still waitng for you to produce any facts. So far all you have produced are innuendos and inflammatory remarks.

 

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Replying to petersaxton:
By Hans Zarkov
22nd Sep 2011 12:31

Facts?

Monty Python wrote:

I'm still waitng for you to produce any facts. So far all you have produced are innuendos and inflammatory remarks.

 

What facts are you waiting for? I've said throughout that I only express opinions. But you did say that it was a fact that you would be ignoring my further posts. Clearly it was more of a threat than a fact.

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By Henry Osadzinski
22nd Sep 2011 12:39

Thread Closed

Comments will be disabled pending moderator actions. If you have any queries feel free to get in touch.

 

Update: Apologies to everyone who provided feedback and advice for the original poster but, due to the thread being derailed by off-topic arguments, comments have now been permanently disabled on this thread. If you have a response to the original post from mr. mischief, feel free to message me and I'll add any appropriate points on your behalf.

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