Reliance on a third party and reasonable excuse

The taxpayer was a director of a company in the restaurant business. The tax adviser who dealt with the company also looked after the taxpayer’s personal tax affairs. A problem arose with the company record-keeping so the contract with the accountant was cancelled and a new one appointed. This process led to his self-assessment return being filed late but the taxpayer contacted HMRC to explain why. 

HMRC imposed penalties against which the taxpayer appealed saying he had a reasonable excuse. He had appointed an adviser to prepare his returns – this had been done satisfactorily for many years and it was only at a very late stage that he became aware the firm would not meet the deadline. However he had done everything ‘humanely possibly’ to address the problem.

The First-tier Tribunal agreed the taxpayer had a reasonable excuse. He had no reason to suspect there was a problem...