Tribunal rejects reliance on adviser as reasonable excuse
A recent First-tier Tribunal decision has confirmed that relying on an accountant does not automatically amount to a reasonable excuse for missing a self-assessment deadline. The case highlights the limits of delegating tax responsibilities. What does this mean in practice?
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Accounting for VAT if there is no cash payment
Your business has submitted repayment returns for the last two quarters and you are concerned that you might have underpaid output tax on some supplies where no money has changed hands. Are your concerns justified?
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Treatment of distributions under review
The government has launched a consultation on modernising the tax treatment of distributions and repayments of capital by companies. The proposals could affect the distinction between dividends taxed as income and capital payments subject to CGT. What changes are being considered?
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Tax relief on equipment you haven’t paid for (yet)
The timing of tax relief for purchases of equipment isn’t straightforward when payments are delayed or goods are purchased through hire purchase (HP) agreements. How can you use these rules to your advantage and get tax relief before you’ve paid the final invoice?
In the case, the taxpayer argued that their failure to file on time was due to reliance on their adviser, who had been responsible for handling their tax affairs. HMRC rejected this explanation and issued late filing penalties. The tribunal agreed with HMRC. It found that while taxpayers may appoint an agent, responsibility for meeting filing deadlines ultimately remains with the taxpayer. Simply assuming that an adviser will deal with matters is not sufficient to establish a reasonable excuse.
The decision reflects a consistent line in tribunal cases that reliance on a third party will only amount to a reasonable excuse in limited circumstances, such as where the taxpayer has taken reasonable steps to ensure compliance and an unexpected failure occurs. The practical message is clear. Even where an accountant is engaged, you should ensure deadlines are understood and met. Regular communication with advisers and monitoring of filing obligations can help prevent avoidable penalties.
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