In J & L Benson Building Services Ltd [2018] TC6545 PAYE RTI penalties were cancelled by the FTT: the specimen copy of an assessment provided to the tribunal by HMRC was rendered invalid.

  • The company was an employer and it failed to submit its PAYE returns under Real Time Information Reporting (RTI) on time.
  • It made payments to staff for the period ending 5 June and 5 July 2017 however it failed to report these until 9 July 2017.
  • HMRC assessed RTI Late filing penalties on 8 September 2017 of £0 and £100.
  • The company appealed. 

The case was heard ' on the papers' and FTT had difficulty with what had been submitted:

  • No copy of the appeal notice was provided in the case bundle nor a copy of the notice of assessment of the penalties, HMRC instead submitted a precis of the case.
  • HMRC had provided a specimen notice which would normally serve to provide evidence of an HMRC generated assessment however the judge rejected as it showed a quarterlly assessment and the penalties were monthly.
  • Neither the notice or HMRC's statement of case indicated how the penalties were calculated.
  • There appeared to be mass of confused computer generated reports in other evidence.

The FTT concluded that the assessment was invalid and allowed the appeal.

In case he was wrong on the invalidity of the assessment, the judge considered other points:

  • The FTT found that the company’s director did not have a Reasonable Excuse for the failure: he admitted he was late and it was a genuine mistake; he didn’t know how to file a return when he owed no money. The next month, when he did owe money, he made the return on time. He confirmed he was the only full time employee and does the paperwork in his spare time and occasionally deadlines get missed.
  • The FTT also noted that the company had been late before in 2015.

Judge's observations

Judge Richard Thomas decided on the need to comment on what he described as ‘the unexplained and the unforgiveable.’

  • The unexplained: HMRC failed to explain why the penalty for the month ended 5 June 2017 was £0.00. HMRC’s Statement of Case showed that this should be £100 for an employer with less than 50 employees. Alternatively, and HMRC said that this did not apply in this case, the penalty could be nil or any other amount.
  • The unforgiveable: that HMRC yet again used their incorrect ‘mantra’ that ‘a reasonable excuse is normally an unexpected or unusual event, either unforeseen or beyond your control…’ when corresponding with the taxpayer. This is not what the law says and it is likely to mislead taxpayers and could prevent them from pursuing valid appeals.


It is disturbing to see that HMRC has still not updated its own guidance on 'reasonable excuse' and that an allegedly modern computerised penalty system should be incapable of producing a valid assessment. We wonder how many more cases like this one are going to appear in front of the tribunal. The worry here is also in the context of future developments in penalties: HMRC is going ahead with a new points based penalty system for Making Tax Digital quarterly reporting as things stand this is likely to spawn some of the most complex appeal cases.

Our Practical tax guides on this topic:

PAYE RTI Penalties

How to appeal a tax penalty

Grounds for appeal: toolkit

Grounds for appeal: Reasonable excuse (freeview)

Grounds for appeal: Reasonable excuse (subscribers)

External links

J & L Benson Building Services Ltd [2018] TC6545