HMRC penalties: Taxpayer’s reasonabale reliance on actions of accountant as agent
In Stephen Taylor v Revenue & Customs Commissioners  UKFTT 182 (TC) a taxpayer had a reasonable excuse for the late filing of his tax return where his agent had failed to submit the return in time even though he had provided her with his accounts within a reasonable time and he had no reason to suspect that she would not file his return in time.
This was an appeal by Mr Taylor against a fixed penalty of £100 for the late filing of his tax return for the year ending April 2013 which was due to be filed by 31 January 2014.
January is typically a frantic time of year for most practising accountants because of the pressure to file year-end tax returns by the deadline of 31 January in any given year. In this case, Mr Taylor submitted his accounts to his agent, Catherine Newman on 18 January 2014. Mrs Newman is a sole practitioner who works from home and has around 350 clients. In January 2014, Mrs Newman’s father-in-law became ill and her usual childcare arrangements suffered causing her to be under unusual extra pressure. Nevertheless by 31 January 2014, Mrs Newman believed she had completed all the tax returns for her clients and thought she had submitted them electronically to HMRC by the due deadline. On 6 February, she discovered that she had omitted to send Mr Taylor’s return. She contacted HMRC immediately to explain the oversight but HMRC imposed the fixed penalty of £100 on Mr Taylor.
With Mrs Newman’s support, Mr Taylor challenged the penalty on the grounds that Mr Taylor had had a reasonable excuse for the failure to submit the return on time because in his opinion, he had taken reasonable care to avoid the failure as he had given Mrs Newman sufficient time to submit the return and she had not previously made a late submission of his tax return.
After levying pointed criticism at Mrs Newman for failing to tell Mr Taylor that she was facing more pressure than usual during January 2014 and for taking on new clients when under too much pressure, Judge King allowed Mr Taylor’s reasonable excuse claim and the penalty was cancelled.
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