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The taxpayer, a builder, ran his own business and traded as a limited company. The firm was almost exclusively subcontracted by Thomas Mitchell Ltd, which ran into problems, delayed payment to the taxpayer, and subsequently went into liquidation owing the taxpayer £500,000.
He took steps to avoid having to go into liquidation himself, which led to him paying his self-assessment tax late. HMRC imposed a default surcharge, against which the taxpayer appealed, claiming reasonable excuse.
The First-tier Tribunal judge found that the taxpayer had made every effort to pay his tax, having set aside funds during the year. He had no history of default and had been overwhelmed by his main contractor going into liquidation.
The taxpayer’s appeal was allowed.
