With the help of tax advisers, AccountingWEB has assembled a guide to the areas on which taxpayers have appealed late payment and filing penalties. [Updated 5 January 2012]
Originating from an idea developed by Atlas Chambers barrister Anne Fairpo, we’ve come up with a scorecard of ‘reasonable excuse’ cases.
Fairpo came up with the idea after there had been a series of decisions against HMRC where it was clear that the tribunal were taking a more lenient view.
Seeing as reasonable excuse is not defined by legislation, the words must take on their ordinary meaning, and as such we thought it would be useful to keep track of what did, or didn't count as reasonable in decided cases.
In the interest of looking for trends, Anne Fairpo commented: “It's not really surprising that there is this degree of inconsistency: by definition, ‘reasonable excuse’ is a subjective test rather than objective and so there will always be variation in interpretation.
“HMRC staff are under increasing pressure with fewer resources and so will not have time to check what previous internal decisions on a topic have been, so staff are taking their own view. Much as ‘no-one was ever fired for buying IBM’, it's probably easier under pressure to err on the side of caution. Within government, that's not usually on the side of the taxpayer,” Fairpo concluded.
HMRC suffered a horrendous April, when it lost six consecutive reasonable excuse cases. This run of defeats included some that followed the European Court of Justice precedent in Jusilla v Finland that tax penalties require the equivalent right to fair trial and “beyond reasonable doubt” proof as a criminal trial. However, the tide of reasonable excuse tribunal cases since then has run more strongly in HMRC’s favour.