In W Coomber v HMRC [2016] UKFTT 0809 the First-Tier Tribunal (FTT) dismissed the taxpayer’s appeal that he had a reasonable excuse because the bank failed to honour his cheque despite sufficient funds.

  • The taxpayer sent his cheque to HMRC on 2 February and was received by HMRC on 4 February 2016.
  • The taxpayer could demonstrate that he had sufficient funds within his account for the cheque to clear.
  • HMRC updated the taxpayers account on receipt of the cheque to show that the amount had been paid, as is normal practice.
  • The cheque was recorded as ‘Unpaid’ by the bank on 8 February 2016.
  • HMRC told the taxpayer’s agent on 1 March 2016 that there was no outstanding payment due.
  • The taxpayer found that the cheque had not been honoured when checking his bank statement at the beginning of March.
  • The tax was paid and credited on 17 March 2016.

HMRC issued a surcharge of 5% of the tax as the payment was more than 30 days late.

The taxpayer contended that he had a reasonable excuse for the late payment:

  • The first opportunity he had to monitor his bank statement was on the 1 March 2016.
  • He cannot be expected to contact the bank on a regular basis to see if cheques have cleared.

The FTT disagreed with this view and decided:

  • It was the taxpayer’s choice to use a cheque rather than BACS, Faster Payment or Direct Debit which would have given immediate knowledge and assurance that the payment was safely received.
  • It was the taxpayer’s choice to leave his payment so late and, in doing so, he risked a late payment if it went missing in the post, for example.
  • It was a large payment (c£19,000), the bank had a freephone number and the taxpayer gave no reason for not checking with the bank if it had cleared.

The FTT concluded by saying that “It is the taxpayer’s responsibility to ensure that any sums due to HMRC are paid on time”. Although the FTT agreed that if the taxpayer had become aware of the situation sooner, he would have paid sooner, this was not the issue at hand, and the appeal was therefore dismissed.

This is a timely reminder to any that pay by cheque, to follow up or check online that the payments have cleared with HMRC.


Our guide:

Penalties: SA late filing & payment

Case reference: W Coomber v HMRC [2016] UKFTT 0809