In David Beadle v HM Revenue and Customs [2020] EWCA Civ 562, the Court of Appeal dismissed an appeal against a late payment penalty relating to an underlying Partner Payment Notice (PPN). The PPN could not be challenged.

  • The taxpayer took part in a tax avoidance scheme through Ingenious Film Partners LLP.
  • The scheme realised a trading loss for 2004/05 and other years. The taxpayer, as a partner in the scheme, claimed side-ways loss relief.
  • After issuing a repayment of approximately £100,000 to the taxpayer, HMRC decided that the arrangements came under Disclosure Of Tax Avoidance Schemes (DOTAS).
  • During the ensuing tax enquiry, HMRC issued the taxpayer with a PPN and reduced the scheme's trading loss for 2004/05 to nil.
  • The taxpayer did not settle the PPN on the basis that:
    • The amount specified in the PPN as due was not due as a matter of law.
    • The PPN was invalid.
  • The taxpayer submitted written representations to HMRC to appeal against the PPN but these were rejected. The taxpayer did not pursue a Judicial Review of HMRC’s decision.
  • HMRC issued a late payment penalty notice for late payment of the PPN and following this, the PPN was settled by the taxpayer.
  • The taxpayer Appealed the penalty on the grounds that he had a ‘reasonable excuse’ based on legal advice, for not duly settling the PPN and ‘special circumstances’ existed that warranted a reduction in the penalty. The appeals were rejected by HMRC.
  • The taxpayer subsequently appealed to the First Tier Tribunal (FTT) and Upper Tribunal (UT). Both appeals were dismissed. The taxpayer then appealed to the Court of Appeal on the permission of the UT.


  • The FTT and UT came to the right conclusions in each of their decisions. The appeal was therefore dismissed by the Court of Appeal.
  • The FTT has no jurisdiction to entertain a direct challenge to the validity of a PPN (a matter of public law) in the course of an appeal against a penalty notice and the ability to raise a collateral (i.e. indirect) public law challenge to the validity of an underlying PPN is excluded at the penalty and enforcement stages. If this were not the case, the express purpose of the PPN regime would be defeated.
  • The purpose of a PPN is not to determine the actual tax due following an enquiry. It is essentially an interim decision which specifies who should hold the disputed tax pending the determination of the final underlying tax liability.
  • Full statutory appeal rights are available in respect of a final determination of the underlying tax liability, offering a means for the taxpayer to challenge the decision and appeal to the courts.


Accelerated Payments & Follower Notices
HMRC can force a taxpayer to correct a tax return in its favour where it considers that a taxpayer has not followed a judicial ruling. This is done by the issue of a 'Follower Notice'. Our guide explains the issue.

Penalties: Late Payment
If tax is paid late, HMRC can charge a penalty for failure to make payments on time.

Appeals: Grounds for Appeal Toolkit
What grounds are there to appeal a tax penalty? How can you word a tax appeal? Can you appeal HMRC errors? What is a reasonable excuse?

Grounds for appeal: Reasonable excuse (Freeview)
What is a 'reasonable excuse' in terms of making an appeal against a tax penalty for late filing, late payment or error?

External links

David Beadle v HM Revenue and Customs [2020] EWCA Civ 562