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The taxpayer company appealed against fixed and daily penalties imposed under FA 1998, Sch 18 para 29 for failing to provide information relating to enquiries into its tax returns.
The company’s accountant claimed that he was overwhelmed with enquiry work and that the information, which related to research and development, required in this instance would take some time to obtain because of its complexity.
While acknowledging the accountant’s problems, HMRC went ahead and issued the penalties.
The First-tier Tribunal said that it was the company that had to have a reasonable excuse, rather than its accountant.
The tribunal accepted that reliance on a third party, e.g. an accountant, could constitute this. In this instance, given the complicated nature of the research and development legislation, it was reasonable for the taxpayer company to rely on its accountant.
The taxpayer company’s appeal was allowed and the penalties were set aside.
