Unpredictable problem

The taxpayer company received a penalty for late payment of PAYE and National Insurance in 2010/11. It had been consistently tardy in the previous four years and was aware of the new fines regime that began in April 2010.

The director claimed the business had been badly affected in the recession by bad debts and customers paying late. A further problem had arisen with an “invoice discounting facility” which unexpectedly changed its terms having an adverse effect on the taxpayer.

The firm claimed it had taken steps to obtain the funds to settle its PAYE bill but an inability to pay was caused by unforeseen events that were out of the company’s control.

The First-tier Tribunal noted the impact of the economic downturn was “understood if not manageable” by the time the new PAYE penalty came in to being. Companies in the same industry as the taxpayer...