Mr Leachman (trading as Whiteley and Leachman) had not filed his P35 end of year return, in the mistaken belief that his accountant would do so. HMRC imposed a penalty for late filing after refusing to accept he had a reasonable excuse.
The Tax Tribunal rejected HMRC’s contention that a reasonable excuse requires
exceptional circumstances. The Judge said: “Parliament has used the ordinary English words ‘reasonable excuse’ which are in everyday use and must be given their normal and natural meaning.”
The Tribunal also confirmed that a penalty charged by HMRC was in the nature of a criminal penalty. Consequently, HMRC had the burden of proving the absence of a Reasonable Excuse.
The FTT found that HMRC had failed to discharge that burden and so the taxpayer’s appeal was upheld.
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