Informal agreement is an excuse

The taxpayer business a husband and wife partnership was established in 1992. Most of its work came from local authorities which did not pay on time.

However the business had always managed to make its PAYE National Insurance and VAT payments by the due dates.

The problem concerned their self assessment liabilities which both Mr and Mrs Bannister often failed to pay on time because of cash flow problems.

They contacted the inspector to warn him whenever there was likely to be a delay in payment and always made the payment before the next one was due. Interest and surcharges did arise but they believed that the inspector was not unduly worried about the situation.

They did not anticipate that late payment of their self assessment tax would jeopardise their business’s gross payment status.

However HMRC withdrew this status on...