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RTI: Staff failing was not a reasonable excuse

After numerous warnings and cancelled penalties, the first tier tribunal (FTT) upheld penalties of £600 for three late RTI returns despite the company administrator’s difficult personal circumstances.

25th Sep 2020
Tax Writer
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Shot of a young businesswoman looking stressed while using a computer at night in a modern office.

Legends Leisure failed to deliver RTI returns on time on several occasions. HMRC’s company education letters stated “PAYE information must be reported to [HMRC] on or before a payment is made to an employee or we may charge you a penalty”.

Some penalties cancelled

HMRC’s records suggested there had been seven defaults in the tax year up to 5 November 2019. Although HMRC issued penalties for those earlier defaults, it had cancelled them, finding Legends Leisure had a reasonable excuse.

The company’s PAYE administrator, responsible for filing the RTI returns, had an ill mother suffering from dementia which had affected the administrator’s ability to complete and submit the returns on time. 

However, in August 2019, HMRC told Legends Leisure that if any more RTI returns were submitted late, penalties would be issued and they would not be cancelled.

Further late RTI returns

Despite HMRC’s August 2019 letter, three RTI returns for the monthly periods ending 5 November 2019, 5 December 2019 and 5 January 2020 were filed late.

In February 2020, HMRC issued three penalties of £200 each for the late filings under paragraph 6C, Schedule 55 Finance Act 2009 – the subject of the appeal [TC07795].

Legends Leisure argued that its administrator, owing to her mother’s condition, was no longer able to carry out her duties, and that it had contracted another individual to take over responsibility for its PAYE work.

There was no suggestion that the calculation of the penalties was wrong, or that the company did not receive the penalty notification.

No reasonable excuse

HMRC argued that Legends Leisure had no reasonable excuse for the late filing of the RTI returns in light of the August 2019 letter, when it was made clear that if any returns submitted after that date were late, penalties would be issued.

The FTT found that Legends Leisure should have taken action to rectify the issues relating to the company’s capacity to submit RTI returns on time, sooner than it actually did.

Although the FTT also had sympathy with the company’s situation, it found that a reasonable taxpayer in Legends Leisure’s position would, given HMRC’s August 2019 letter and education letters, have put in place alternative arrangements to ensure that RTI returns were filed on time.

The FTT agreed there were no special circumstances to warrant a reduction of the penalties; the failure by an employee to carry out their duties did not amount to special circumstances, even where that failure arises from distressing personal circumstances.

The appeal was dismissed.


This case also highlighted a procedural matter of which those wishing to appeal to tax tribunal should be aware. For an appeal of this nature, Legends Leisure should have first made an appeal to HMRC, but instead appealed directly to the FTT.

While the appeal, in this case, was ultimately allowed to proceed, it serves as a due reminder of the importance of following the correct appeals process.

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