In Timothy Raggatt QC v HMRC UKUT 0412, the upper tribunal held that a barrister with fluctuating income does not need to provide a reserve to pay his or her income tax but must still make adequate provisions to pay income tax as it falls due.

  • Due to the timings of self-assessment, some self-employed people may pay income tax and NICs up to two years after the income has been earned. Late payment of tax can be a problem when income is eratic or declining.
  • The taxpayer was a barrister of 40 years’ standing. He had a history of always paying his tax but with little reference to due dates.
  • HMRC imposed late filing penalties for 2012/13 of £9,795; and for 2013/14 for £3,640.
  • The taxpayer appealed. He claimed that he had reasonable excuse for late payment: the government’s reduction in fees for legal aid work, the bank refusing to increasing his overdraft facility and an expensive divorce settlement.

The First Tier Tribunal (FTT) did not allow the appeal.

The taxpayer made a furhter appeal to the Upper Tribunal (UT) on the basis that the FTT had misunderstood the facts and misapplied the tests for reasonable excuse.

The UT agreed with the FTT: the excuses were not reasonable. Changes to legal aid fees were known about years in advance, the bank had made it clear that his overdraft would not be extended and there was evidence that the divorce had not impacted cashflow because he had bought a house.


As the judges noted: "although there is no legal requirement on the part of a self-employed professional person to reserve for his or her tax liabilities, in our view, a person with such an episodic life would be well advised to take reasonable steps to make some provision for tax liabilities or to ensure that he or she has appropriate bank facilities available to meet his or her expected tax liabilities if he or she subsequently wishes to rely on a reasonable excuse defence.”

Useful guides

Self Assessment late payment and filing penalties

How to appeal a tax penalty

Making Tax Digital: index and timeline

External links

Timothy Raggatt QC v HMRC UKUT 0412

Timothy Raggatt QC v HMRC [2017] TC051445

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