In B Humphreys Building Construction Ltd v HMRC  TC7289 the First Tier Tribunal dismissed an appeal against corporation tax return late filing penalties; reliance on an adviser and software issues were not a reasonable excuse for a third successive late return.
A taxpayer may appeal a tax penalty when they are able to prove that they have a reasonable excuse for not doing what they are supposed to do.
- Case law has previously indicated that reliance on an adviser can be a reasonable excuse in non-VAT cases in certain circumstances.
The company filed its corporation tax return for the year ended 30 June 2017 over 8 months late and received flat rate late filing penalties of £1,000. There was no tax liability due for the period.
- The company appealed on the basis that the necessary information had been provided before the deadline:
- They had been unable to deliver the accounts in the iXBRL format required due to problems with software and the illness of their accountant who had the necessary paperwork. They had instead submitted accounts in a non iXBRL format but these had been rejected.
- The FTT dismissed the appeal and upheld the penalties.
The judge said primary responsibility for the company’s tax filing obligations is with the company and reliance on a third party does not constitute a reasonable excuse, pointing out that this was the third time the company had failed to file its return on time despite the timely filing of its accounts with Companies House for the same three periods. The company should have had back up arrangements in place and the fact that they did not suggested that they did not exercise the care and foresight expected of a company adhering to its responsibilities under the Companies Act.
Links to our guides:
- Companies: filing & payment deadlines
Penalties: Corporation tax
Grounds for Appeal: Reasonable excuse
How to appeal a tax penalty (subscriber version)