The taxpayer made a set-payment arrangement under TMA 1970 s 108 which he believed related to all tax due from the period in which he traded: 2 February 2009 to 16 October 2009.
The arrangement began in April 2010 at a rate of £60 a month. He did not realise his trading period straddled two tax years and that the arrangement covered only the year to 5 April 2009.
As a result he did not pay the tax due for 2009/10 on 31 January 2011 and so incurred a 5% late payment surcharge.
He appealed claiming it was ‘unfair and unreasonable’ for HMRC to impose a penalty in light of the factual background.
The First-tier Tribunal accepted the taxpayer’s arguments and noted the taxpayer had kept up with the payments due under the arrangement made in April...
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