Very reasonable excuse
A recent First Tier Tribunal case considered whether or not a businessman had a reasonable excuse for a late VAT payment – and hence should suffer no penalty.
He had been late paying his VAT (three times) and HMRC imposed a surcharge. He appealed against this, claiming reasonable excuse.
The Tribunal noted that cash flow problems would not on their own constitute a reasonable excuse. However, through his agent, the businessman had done all he could to settle the VAT bill; the agent began calling HMRC on 5 February (payment being due on 7 February) but failed to make contact until 12 February when a time-to-pay agreement was made and adhered to. The problems calling HMRC were ‘unexpected and unforeseeable’.
HMRC claimed that the taxpayer and his agent should have been aware that the phone lines would be busy (!). The Tribunal’s view was that HMRC did not publish times when its lines were likely to be busy and, ‘rather than expecting delays’, it was ‘reasonable for a taxpayer to expect calls to be answered without delay’.
Indeed, the Judge said: ‘HMRC are in a better position than the appellant to know when there is a likelihood of a large volume of calls and they should have arrangements in place to deal with the higher volume of calls promptly’.
On that basis the taxpayer’s appeal was allowed and no surcharge was due.
Somehow it feels like justice is properly done in this case.
Date: 3rd October, 2016
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