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Reasonable Excuse scorecard 2011: Taxpayers 20 HMRC 12

19th Aug 2011
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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.

Reasonable excuse decisions - YES

HMD Response International v HMRC 2011] UKFTT 472
15 July 2011 - HMRC claimed not to have received a return for 2010 by 19 May, but the first HMD Response and its agent heard about it was via a penalty notice for £400 on 27 September - too late to meet the deadline for another £100 increment on the penalty. The accountant produced a contemporaneous note in his office diary for 16 May showing that he had filed the return. He said that he genuinely and honestly believed that the filing had successfully taken place, the judges found and upheld the appeal. The ruling is also notable for its criticism of the unfairness of HMRC's PAYE penalty regime and for sending the charity a letter claiming it had been ignoring HMRC's efforts to resolve the matter while the penalties were still under review. [TC01322]

Maxine Barron v HMRC [2011] UKFTT 482
7 July 2011 - Miss Barron appealed against a penalty of £54.07 levied against her in respect of a late payment of tax, as a result of impecuniosity. The tribunal said that while impecuniosity per se might not amount to a reasonable excuse, the cause of or reason for such impecuniosity might nonetheless amount to, or give rise to, a reasonable excuse. It found that they “are words in ordinary everyday use and the gloss that HMRC seeks to place upon them, cannot be justified.” [TC01329]

Tower Perkins Products and Services v HMRC [2011] UKFTT 481
7 July 2011 - HMRC imposed penalties totalling £1,000 for the late filing of an employer’s annual return, P35. Elderly sole practitioner Mr Akhaney said that the delay occurred because he was taken into hospital on an emergency basis with a broken hip prosthesis. The court found that this reasonable excuse must have come to an end when Akhaney was able to and did return to work. The appeal was allowed in part and the penalty reduced from £1,000 to £600. [TC01328]

Rushworths Furniture v HMRC [2011] UKFTT 480
7 July 2011 - The appellant had sent a copy of a computer-generated document headed "Submit Employer Annual Return" for Rushworths Furniture recording that the necessary P35 online submission was "complete". That information appeared under the heading "Previous Successful Submissions”. Online filing took place and it was not in default, regardless of whether HMRC’s computer system admits or denies that the online filing was received by it. The tribunal found that HMRC did not act fairly or in good conscience. [TC01327]

Alan Thomas Davies v HMRC [2011] UKFTT 303
9 May 2011 - Mr Davies appealed against a £100 penalty for late submission of a monthly CIS return after relying on misleading advice of post office staff when the envelope was weighed for large letter postage. Next day delivery was not guaranteed, but he had allowed three days for delivery. In the circumstances the tribunal found it difficult to see what more the appellant could have done to ensure delivery on time. [TC01165]

Leachman v HMRC [2011] UKFTT 261
19 April 2011 - This taxpayer was fined for failing to file a P35 under the mistaken belief that his accountant would do so. The tribunal found that if one person genuinely believes that another person is undertaking a particular task and that other person genuinely believes that the original person is undertaking that task, each is labouring under a mistake of fact. The tribunal ruled that a genuine mistake can constitute a “reasonable excuse” and applied the recent European Court of Justice Jusilla v Finland precedent that actions resulting in penalties needed to be proved beyond a reasonable doubt. [TC01125]

NA Dudley Electrical Contractors v HMRC [2011] UKFTT 260
19 April 2011 - Electrical contractor appealed against a penalty imposed by HMRC consequent upon the late filing of a P35. The ground of appeal was that no P35 was issued to the appellant by HMRC and so it could not return that which it had not received. HMRC failed to satisfy the judge that it was justified in assuming that it need not send a paper return to the appellant simply because, as a matter of fact, its P35 for the year end had been filed online by its agent. [TC01124]

Louise Fernandez v HMRC [2011] UKFTT 259
19 April 2011 - The appellant had attempted to use the online filing facility provided by HMRC but found herself denied access to the site. She also sent e-mails to customer support seeking assistance. The tribunal found that she had a reasonable excuse because the online filing facility did not work as it should when she tried to use it. HMRC also failed to provide her with the help that she had requested within a reasonable time. A second appeal was not allowed as the reasonable excuse could not apply to her continued failure to file. [TC01123]

TJ Fisher (T/a The Crispin) v HMRC [2011] UKFTT 235
11 April 2011 - The appellant left the business and paid his employees up to date and issued them with P45s. As the business ceased, an employer’s annual return should have been submitted to HMRC. No such return was made and HMRC sent a fixed penalty charge of £800. During a telephone call with HMRC Fisher requested advice about what was required when he closed his business. HMRC said he should send a letter, which he did, but did not advise that any further returns would be necessary once the PAYE deducted taxes had been paid up to the date P45s were issued. The appellant was misled by omission rather than by commission, the tribunal ruled. [TC01100]

Yusuf Budiadi v HMRC [2011] UKFTT 233
8 April 2011 - Mr Budiadi left employment with UBS and received a further payment shortly after. The company deducted only basic rate tax from the payment that did not relflect that he paid higher rate income tax. As he was unaware that his employer had not deducted all tax that was properly deductible and payable, he satisfied the tribunal criteria for reasonable excuse. [TC01098]

Kincaid v HMRC [2011] UKFTT 225
6 April 2011 - Appellant was unable to pay tax on time because of cashflow difficulties, partly caused by HMRC changing the taxpayer’s CIS status. The tribunal found difficulties with HMRC’s contention, due to the wording of the legislation, and HMRC was unable to refer the tribunal to any previous decisions in support of their position on this point. [TC01090]

Dental IT v HMRC [2011] UKFTT 128
18 Feb 2011 - A doctor appealed against default surcharges imposed for the late payments of VAT for quarters ending in January and April 2010 totalling £1,245.74. Reliance on misleading advice given by HMRC helpline staff was considered ‘reasonable excuse’ for a mistake in a tax return. [TC01002]

Humphreys v HMRC [2011] UKFTT 98
2 Feb 2011 - Taxpayer posted his return four days before the deadline was fined when the return arrived late. The tribunal ruled that HMRC had been wrong to impose a penalty despite its guidance that postal delays could only be considered ‘reasonable excuse’ in the most extreme circumstances. Tribunal ruled it was a reasonable excuse for a taxpayer to demonstrate that lateness was caused by misleading or inaccurate information provided to him by the person who now seeks to levy a surcharge based upon that lateness. [TC00974]

Runham & Naramore v HMRC [2011] UKFTT 55
17 Jan 2011 - Taxpayers appealed against £100 penalties for failing to submit a land transaction returns within 30 of the transaction. Their solicitor posted an SDLT return that that was apparently not received by HMRC. When solicitor discovered the return had not been received, she immediately filed the return online and paid the tax by electronic transfer. The judge ruled that the tribunal is not bound by HMRC’s construction of “reasonable excuse”. [TC0933]

Writtle College Services Ltd v HMRC [2011] UKFTT 478

15 July 2011 – This case involved an appeal against a penalty for the late filing of P35 returns. On 8 April 2010 Writtle College Services sent its P35 return to HMRC but didn’t realise that in order to make a successful submission it was necessary to untick the test submission box. When HMRC acknowledged receipt Writtle assumed its P35 had been filed. HMRC issued a £400 penalty to Writtle in a letter dated 27 September 2010. The tribunal found the company had a reasonable excuse and the penalties were not due. [TCO1325]

Martin Stone v HMRC [2010] UKFTT 414

23 July 2010 – Martin Stone suffered from significant health problems yet ran a construction company. He was issued a fine of £31,800 for submitting no monthly Construction Industry Scheme returns from May 2007 - October 2009. The ruling praised Stone, calling him "stoical" stating that in and of itself, his health would be a "borderline" reasonable excuse. However with a failure from HMRC to send the right forms to Stone, making it a "physical impossibility" for him to remain on top of the tax returns, the appeal was upheld. [TC00684]

Knapper v Revenue & Customs [2011] UKFTT 365

1 June 2011 – This was an appeal against two default surcharges imposed in respect of the late payment by the Mr Knapper of tax in respect of the 2007/08 tax year.  The tribunal considered that the appellant’s case went beyond a mere claim of inability to pay, rather, his case was that unforeseen acts of a third party beyond his control had brought about a financial predicament that left him unable to pay. On the basis of his oral evidence and the documentary evidence submitted, the tribunal considered that the financial consequences of the unexpected and unforeseeable termination of a consultancy agreement, coupled with the fact that the payments received by the appellant under the agreement turned out to be significantly less than what he was expecting, are in combination sufficient to amount to a reasonable excuse in the circumstances of this case. [TC01220]

Consult Solutions v Revenue & Customs [2011] UKFTT 429

30 June 2011 - Consult Solutions appealed a ₤500 penalty for failure to submit an employer’s annual return (P35), claiming it had only been trading for eight months, and this was the first time that it had been required to file an end of year return online. HMRC advised the appellant that its online return failed because of a systems or internet error. The tribunal found that the firm’s lack of knowledge of the receipting arrangements was understandable given that this was the first time they had used the online facility, and that the systems or internet error was beyond their control. [TC01282]

 Buxton Rugby Union Football Club v Revenue & Customs [2011] UKFTT 428

29 June 2011 - The club appealed against penalties of £565, £500 and £500 imposed for late filing of the 2005-06, 2006-07 and 2007-08 end of year returns (P35) respectively. The club treasurer had filed the 2004-05 return online but found it complex and reverted to paper filing for 2005-06. However, because the club had used online filing for 2004-05, HMRC did not issue a paper form for 2005-06 and the Club missed the filing deadline. HMRC provided no evidence that the club was told it would not receive a paper form because they had filed online the previous year, as per the Dudley case. [TC01281]

 Stephen Rich v Revenue & Customs [2011] UKFTT 533

8 August 2011 - The case concerned an appeal against a penalty for late notification of chargeability to Self Assessment income tax for 2006/07. The appellant explained that they had relied on his accountant to notify HMRC of his liability to tax in April 2007. The accountant did so in April 2008. The tribunal was satisfied that the accountants sent the form and that it was either lost in the post or mislaid by HMRC on receipt. In considering whether reliance on a third party can amount to reasonable excuse for the purposes of levying any surcharges for late payment, the tribunal cited the Thorne case and Enterprise Safety Coaches cases where reliance on a third party was accepted as a reasonable excuse. The appeal was allowed. [Summary borrowed with thanks from Smith & Williamson's 30 August Tax Update] [TC 01380]

Reasonable excuse decisions - NO

Peacock Developments v HMRC [2011] UKFTT 491
7 July 2011 - An automatic penalty was levied against Peacock by HMRC  for failure to file its Contractor’s Monthly Return. The tribunal found that even when it gave the words ‘reasonable excuse’ their ordinary meaning it could not accept that where the manner in which a business is organised results in late filing, that fact is sufficient to establish a reasonable excuse for that late filing.  It said: “If it was capable of amounting to a reasonable excuse, it would mean that any poorly administered company would be able to rely upon its own shortcomings to establish a reasonable excuse in respect of consequent defaults.”

McCann v HMRC [2011] UKFTT 440
5 July 2011 - Appeal was dismissed against late payment surcharge. McCann had claimed that that the unpaid tax arose as a result of only basic rate tax being deducted from his redundancy payment, whereas a 40% deduction should have applied. The tribunal ruled that ignorance of the law is no excuse; it was open to him to contact his former employer at the time he received his P60 or soon afterwards. [TC01293]

Blue Forest v HMRC [2011] UKFTT 447
5 July 2011 - Blue Forest appealed against the imposition of a default surcharge of ₤699.34 under s 59 VATA 1994. However the tribunal found that the appellant had the means to pay its VAT on time, and could have used a payment method that would not have resulted in late payment. It found that “a reasonably diligent taxpayer would have considered other methods of making timely payment if the method it first contemplated was not available.” [TC01300]

Kellswater v HMRC [2011] UKFTT 430
30 June 2011 - The Kellswater Reformed Presbyterian Church lost its appeal against £400 in penalties for failing to submit a P35 for the year ending 5 April 2010. The Church did not possess a computer and the treasurer’s machine was not compatible with HMRC’s system. In spite of its lack of technical expertise, the tribunal found that a prudent employer would have used the help available from HMRC for online filing, and explored options of seeking technical expertise outside the congregation. [TC0128]

RFL Consultants v HMRC [2011] UKFTT 431
30 June 2011 - The appellant’s reason for default was that HMRC was high blood pressure in the month before the return was due. The tribunal found that the illness did not constitute a reasonable excuse because the timing of the illness did not correspond to the period of default. It was satisfied that the appellant’s actions were not those of a prudent employer exercising reasonable foresight and due diligence and having proper regard for its responsibilities under the Tax Acts. [TC01284]

Grant Vehicle Repairs v HMRC [2011] UKFTT 420
28 June 2011 - Company bookkeeper accepted that she had forgotten to send the VAT payment due on after her domestic partner arranged a “surprise” holiday. The return was submitted in good time, but the payment was not received until eight days after the due date. The tribunal found that the company director and secretary, who both had an involvement with the company’s general business administration, were available. [TC01273]

Impossible TV v HRMC [2011] UKFTT 413
24 June 2011 - Delayed VAT payments arose as a result of the appellant having online banking problems when he came to arrange payment. The tribunal was given no detail of these financial difficulties and was not told whether they were solely the result of lack of knowledge about limits on online payments or the result of computer or telephone line failure. Appeal dismissed. [TC01266]

Hoar Cross Parish Council v HMRC [2011] UKFTT 362
6 May 2011 - The tribunal found that the return was not submitted by the deadline. It considered it improbable that the HMRC system would receive a return without generating a confirmation message, and without the system recording that the return had been received. It also found that if an attempt was made by the appellant to submit a return online within the deadline, it should have been apparent to the appellant at the time that the attempt had been unsuccessful v HMRC [2011] UKFTT 363
6 May 2011 – It found that an employer does not discharge the responsibility to submit a return merely by seeking in good faith to submit a return online, if the return is not received by the HMRC computer system. The tribunal considered it improbable that the HMRC system would receive a return without generating a confirmation message.

Tony Bacon Decorators v HMRC [2011] UKFTT 497
28 April 2011 - A penalty was imposed for the late submission of the monthly Construction Industry Scheme (CIS) return. The court found that the appellant was clearly experienced in the CIS and conversant with the requirements of the CIS regulations to submit monthly returns on time. It was the appellant’s responsibility to ensure that the CIS monthly return was filed on time. The appellant had not produced any evidence to show that the return was posted in time to reach HMRC.

Rocco Mana t/a Spearmint Rhino Rouge v HMRC [2011] UKFTT 153
2 March 2011 - Rocco Mana lost its appeal against three default surcharges levied on it in respect of its late payment of VAT. The First-tier Tribunal found the lap dancing company’s claim that it was unable to receive post as not a reasonable excuse. It found that the company ought to have known its VAT liability, the date on which it was due to be paid, and should have put in place an effective system for receiving its post. [TC01027]

 Freshwater Systems and Services v HMRC [2011] UKFTT 364

19 May 2011 – The appellant appealed against a £180 penalty for the late filing of its P35 employer’s annual return for the tax year 2009/10. Freshwater’s objection was that it submitted the correct forms online in time, but was unable to receive any form of receipt or confirmation of delivery or warning that delivery was ineffective. It then took HMRC four months to advise him of non-receipt. However an internal review found there had been no problems with the HMRC computer systems at the relevant time that prevented the appellant from filing successfully. The tribunal found that it was improbable that the HMRC system would receive a return without generating a confirmation message, and without the system recording that the return had been received. [TC01219]

 Michael Mackey v Revenue & Customs [2011] UKFTT 500

25 July 2011 - The appellant claimed expenses above threshold and caught by Self Assessment legislation, resulting in late payment and failure to notify HMRC of a new address. Mackey claimed that underpaid tax should have been collected from his PAYE coding, but his Self Assessment return was not captured in time for correct coding to be implemented before payment due. The appeal was dismissed on the grounds that it was the appellant’s responsibility to ensure that the tax codes were correct and to notify HMRC of any changes. Mackey had the opportunity at that time to provide HMRC with a more realistic estimate of his expenses so that the correct code could have been operated. [TC01347]

Replies (17)

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By awdeek123
03rd Aug 2011 17:40

Late Filing - Companies House

Does anyone have a view if any of the recent HMRC cases could be used in relation to a £150 late filing penalty imposed by Companies House?  The accounts for filing were mailed from Aberdeen to CH in plenty of time but were delayed by a local (Edinburgh) Royal Mail strike  that I could not reasonably have known about.  The accounts arrived 2 hours after the deadline. At the time the CH website included a temporary notice stating that strike action would not constitute an acceptable excuse for late delivery. I called CH and was told that a penalty would only be withdrawn under exceptional circumstances and that there would be no point in appealing. This happened about 3 years ago but, being Aberdonian,  I'm not over it yet!

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Replying to Time for change:
By ThornyIssues
04th Aug 2011 08:17

Late Filing - Companies House

Unless HMRC can win on the grounds of your "lack of clairvoyance", I'd appeal.

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Replying to againstausterity:
By awdeek123
04th Aug 2011 10:13

Companies House (Scotland) late filing fines

Thanks Thorny

 I guess my question could have been a bit clearer - my late filing fine concerned Companies House rather than HMRC and I wondered if the latest rulings were specifically to do with the wording of the HMRC penalty clauses (which rely on 'reasonable' excuse) or if they could be applied more widely. The CH rules appear to be stricter as detailed below.





Will the Registrar accept any mitigating circumstances if the accounts are delivered late?

Yes. The Registrar has discretion not to collect a penalty, but exercises it in a company’s favour only in the most exceptional circumstances.

Directors have to fulfil all their legal duties despite being in ill-health or elderly. Any director whose ability is impaired should ensure that a replacement is appointed or that other directors know the situation and make appropriate arrangements. Neither ill health nor advancing years will allow the Registrar to exercise discretion and not collect late filing penalties. The nature of the Registrar's discretion was judicially reviewed in 2002.


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John Stokdyk, AccountingWEB head of insight
By John Stokdyk
08th Aug 2011 14:35

Sorry if you've had difficulties accessing this item

I did an edit just before we sent out this morning's Tax bulletin (removing a duplicate taxpayer win), but with our new system changing the headline also changed the link from what was published in the headline. We've altered it manually to stay consistent for other bulletin readers and apologise to anyone who was inconvenienced by the inconsistency.

I'm afraid it's another case of getting used to the quirks of our new content management system.

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By pawncob
08th Aug 2011 14:39


If ignorance of the law is no excuse, why did I get away with this?

(Appeal letter resulting in fine being withdrawn)

I have received the Late Filing Penalty notice in respect of the above for March 2011.

All returns have been filed on line, and have been NIL returns as we have not yet commenced to use any sub contractors. I was not aware that Nil returns had to be submitted at all, let alone by the 19th of the month, as this has never been necessary for PAYE returns.

In the circumstances, I would be grateful if you would cancel the Notice 



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By allan@watsonexec
09th Aug 2011 11:15

Late Filing Penalty - Companies House

I am currently embroiled in an appeal against a late penalty for filing company accounts 1 day late. The reason for this for this was a mistype made by the member of staff at our accountants changing the first accounting date to 31st March. She put 30th March in error. This was noticed and Companies House were telephoned to point out the error almost immediately. The advice given to the member of staff was very vague but the main thrust was that there could not be a change in accounting date within 5 years but as accounts could be filed up to 7 days either side it would not matter. The 2008 and 2009 accounts were subsequently filed with 31st March year ends but unfortunately our accountants were under pressure with the 2010 accounts and these were filed on the 31st December. Companies House maintain that these are late as they should have been filed on the 30th December and refuse to accept the actual situation i.e. the accounting reference date is 31st March or consider that their information had "contributed to the late filing". The letters back from Companies House are almost farcical in that they steadfastly refuse to say why the error was not rectified or why the information given was misleading. They have even prevaricated over a Freedom of Information request asking why the error could not be rectified.I am now going down the route of Jusilla v Finland to get actual factual evidence brought to light. It is ridiculous that so much time and money is spent on both sides on something like this when every business in the country needs help and guidance from Governmental bodies. Has anyone else come across such intransigence from Companies House and has anybody tried Jusilla v Finland in their argument?

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Nigel Harris
By Nigel Harris
09th Aug 2011 12:58

Excellent article

What an excelent article Robert. This really is the sort of in-depth technical analysis that tax practitioners need from AccountingWEB. Keep it up!

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By dwaccounting
15th Aug 2011 12:29

Late filing penalty - Companies House

Is reasonable excuse even entertained by Companies House - I have recently read the guidance notes they have issued on this topic - I particularly like Scenario 3 - I would have thought that the death of your accountant would constitute reasonable excuse!


Scenario 3 - Accountant was ill or has died Decision - Subject to cases of individual merit, the penalty is usually collected. All of this would be laughable if it wasn't for the increase in penalties - Does anyone know how quickly Companies House write and let you know that they haven't received your accounts - do they write within a week (whilst penalty is still £150) or do they wait until say fifth week when the penalty has increased to £375?

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By exhuang
19th Aug 2011 17:59

Another two wins for Taxpayers

Consult Solutions (TC1282)

Buxton RUFC TC1281


Question to the author: will this article be kept up to date?

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Replying to mabzden:
John Stokdyk, AccountingWEB head of insight
By John Stokdyk
22nd Aug 2011 18:56

Thanks for the additional case references

Thank you exhauang for bringing Consult Solutions and Buxton RUFC to our attention. Yes, the article will be updated on an occasional basis and these two will be included. There is one other "no reciept of submission" defeat for the taxpayer (Freshwater Systems and Services v HMRC) from the same time and day as and [***] Cross Parish Council. The decision is available on the official Tax Tribunal site, but not yet from, where we've sourced all the other reasonable excuse decisions (it's got a slightly better search engine, although the tax tribunal site allows you to search for specific judges. We'll include all three in our next update.

By my current calculation, the running score is now 16-11 to the taxpayer. But with judges Stalker and Jones adopting what appear to be different stances on the inherent reliability of HMRC systems and the burden of proof required for penalties, I expect to see one of these cases go to appeal before too long.

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By dgwsoft
21st Aug 2011 19:52

VAT late payment surcharge successfully appealed


I have just successfully appealed against a late payment surcharge, imposed because HMRC did not receive an electronic payment, made on the same day that the VAT return was electronically filed, on the day it was made.

Here is the correspondence in case it is of use to others:

p { margin-bottom: 0.08in; }


10 July 2011


Surcharge notice dated 17/06/11


Dear Sir/Madam,


I request that you review the surcharge notice for the period 1/2/2011 to 30/4/2011 (copy enclosed). Our records show that the VAT return was submitted online on 6/6/2011 and electronic payment was made on 7/6/2011, within the deadline for electronic payments.


I have received the following explanation by email:


Our Reference: XXXXXXX


Dear Mr Williams

04.11 Default surcharge

Thank you for your enquiry of 28 June 2011, regarding the surcharge issued for the 04.11 VAT period.

As you may be aware, if you pay the VAT due shown on the return electronically, you may receive up to an extra 7 calendar days to submit your return and for your electronic payment to reach us. Payment must be received in our bank account during this time. If the 7th day falls on a bank holiday or on a weekend, payment must be received by the last working day beforehand.

HMRC does not operate the Faster Payments Service (FPS), which is offered by some banks. When making an electronic payment to HMRC you will need to make sure you make your payment to allow sufficient time for the payment to reach us. You may incur a default surcharge penalty for late payment if your payment does not reach HMRC by the due date.


Having checked our records, I can advise that we received your payment on 9 June 2011, which is outside the up to 7 calendar days granted for paying electronically.

If you disagree with either our decision to issue a surcharge, or how the surcharge has been calculated, you may ask us to review our decision by writing to our Review Team at the address below. Our Review Team will consider your request and reply directly with their decision.

Yours sincerely


VAT Written Enquiries Officer


I do not consider this response satisfactory because:


Funds were made available, and debited from our bank account on 7/6/2011. If they were not shown as cleared by HMRC’s bank until 9th then that is a matter between you and your bank. I do not believe you can lawfully regard the payment as not having been received and levy penalties on that basis.

(NB my building society also hangs on to funds for three working days after I deposit a cheque. It is very irritating, but I do not complain to the payer about it).


I do not believe the notice of assessment of surcharge can be lawful, because it does not state whether we are supposed to be in default in respect of the return or the payment, and it does not explain why the surcharge is calculated at a rate of 10%. Surely if you are going to issue a surcharge you must explain the basis for it?

When I have received surcharge notices previously I have assumed that the return was received late. Now I wonder if you were just quibbling about the time taken for cheques to clear. I would like to know the grounds for previous surcharge notices, and I may wish to challenge those too.


I believe your requirement that payments should clear by the due date (in respect of either cheques or electronic payments) is a recent one. When was this change made, and when and how was it communicated to taxpayers, and has it been tested at appeal?


I think I was entitled to assume that either a cheque enclosed with a VAT return, or an electronic payment made within the deadline for online filing, is a payment made on time.



Yours sincerely


Gareth Williams





Date: 15/08/11


Dear Sir/Madam,


Default Surcharge Liability: 04:11

VAT Registration Number XXXXXXXX


Thank you for your letter dated 10/07/11 in which you requested a review of the default surcharge issued to you regarding the period 04/11 VAT return.


The Commissioners of HM Revenue and Customs have agreed to cancel the default for the above period. I am today sending instructions for the Surcharge Liability Notice to be removed.


Please note: Your payment was received late on 09/06/11. HMRC dos not currently operate the faster payment service for BACS and online transactions offered by most UK High Street banks for electronic transfers.


For future reference please note that when paying by the BACS system under the seven-day extension scheme payments must reach the Customs account by the seventh calendar day. However, if the seventh day falls on a weekend ...  (Blah Blah Blah).




Does the panel think:


a) the review officer was feeling generous, or

b) HMRC do not want the legality of this kind of surcharge tested?


I think I should write again asking why HMRC do not operate faster payments, and follow up with a letter to my MP.



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By exhuang
26th Aug 2011 16:36

case reference above

Thank you John.

BTW, the reference for the Kellswater Reformed Presbyterian Church case noted above is TC01283 rather than TC0128.


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John Stokdyk, AccountingWEB head of insight
By John Stokdyk
31st Aug 2011 13:03

Another taxpayer victory

Stephen Rich v HMRC (TC 01380) - summary borrowed with thanks from Smith & Williamson's 30 August Tax Update (PDF)

The case concerned an appeal against a penalty for late notification of chargeability to Self Assessment income tax for 2006/07. The appellant explained that they had relied on his accountant to notify HMRC of his liability to tax in April 2007. The accountant did so in April 2008.

The Tribunal was satisfied that the accountants sent the form and that it was either lost in the post or mislaid by HMRC on receipt. In considering whether reliance on a third party can amount to reasonable excuse for the purposes of levying any surcharges for late payment, the Tribunal cited the Thorne case and Enterprise Safety Coaches cases where reliance on a third party was accepted as a reasonable excuse. The appeal was allowed.

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By RonSloan
30th Sep 2011 17:57

Reasonable Excuse rulings

Re an earlier post of mine, I have now found that the other main reason in the Humphreys case was that online filing for a Partnership Tax Return is not possible using the HMRC system, but required the puchase of 3rd party software, which was not disclosed.

This reason is wrongly attributed to the Dudley case, which error I discovered only by reading through the full Tribunal Decisions.  However, accountingWEB still offers a great service!

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By taxhound
11th Apr 2012 10:56

Another victory

I appealed against a penalty surcharge on the grounds that the client had no money to pay the tax (illness and redundancy).  He tried to make an agreement with HMRC for a structured payment, had to renegotiate due to a failed house sale and they would not assist.

HMRC rejected the appeal against the surcharge.  I appealed to the first tier tribunal and HMRC have now agreed to accept the appeal and cancel the penalties.

Why my client (who can ill afford to pay for anything) has to go through so many hoops is a mystery.  Of course I am the one who ends up out of pocket as I accepted a very reduced fee from the client (happy to help him in the circumstances - incensed at HMRCs treatment).  The cynic in me thinks HMRC are determined someone will pay somewhere.

It should be easier/cheaper than this for those with a genuine case.

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By amco
21st Jul 2012 00:20


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By exhuang
16th Jan 2013 20:30


It appears this scorecard was last updated a year ago.  Is there a scorecard for 2012? Or would it be best to keep all the scorecards on one page?


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