In Ryden Contractors Limited v HMRC [2020] TC07937, the First Tier Tribunal (FTT) rejected an appeal against Corporation Tax late filing penalties. Whilst there had been reasonable excuse, this did not explain the still outstanding return.

  • The sole director of Ryden Contractors Ltd had been injured at work in October 2017 and required two separate surgeries. 
  • As a result, he could not afford to retain his accountant.
  • The company accounts for 28 February 2018 were filed on time with Companies House but the Corporation Tax return (CT600) was not filed on time. At the time of the hearing, the return had still not been filed.
  • HMRC issued penalties for late filing up to and including the penalty for 12 months overdue. The calculation of the penalties was not disputed.
  • The appellant appealed the penalties directly to the FTT on 1 June 2020 on the basis of reasonable excuse. HMRC objected on the grounds of a late appeal (although allowed the procedural abnormality).

The FTT was required first to consider whether to grant the late appeal and second, whether the appeal should succeed on the grounds of reasonable excuse. The FTT found that:

  • Had the late appeal been admitted, there was no reason for the CT600 to be still outstanding and accruing penalties, except for potentially the lack of funds to employ an accountant.
  • As a building contractor, whose line of work was one with a high risk of injury, the appellant should have had insurance to cover such eventualities and ensure that the statutory obligations were met.
  • The appellant was aware of the need to file the CT600 for many months and had failed to do so, despite the accounts for the same year having been filed.
  • Even if the director's injury had been a reasonable excuse, the appellant did not remedy the situation despite promises to the contrary within the time-frame since his injury.
  • The argument for reasonable excuse did not need to be considered in detail as the application for a late appeal was not granted. The appellant had failed to provide a satisfactory explanation for the delay.

Useful guides on this topic

Adviser's Tax Penalty Planner 
A guide to the key direct and indirect tax penalty regimes for returns and payments, excluding VAT.

How to appeal an HMRC decision 
What type of decision can you appeal? What are your different options when you disagree with HMRC? What are the key steps in making an appeal?

Ground for appeal: Reasonable excuse 
What is considered to be a 'reasonable excuse' when a taxpayer makes an appeal?

External links 

Ryden Contractors Limited v HMRC [2020] TC07937

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