Honest and genuine beliefs

The taxpayer was required to file a tax return and pay tax of £228 013 by 31 January 2011. Payment was not made until 7 March 2011. As a result a surcharge notice of £11 400 was issued by HMRC.

The taxpayer planned to pay the tax from a company account because she left her own money with her company as a director’s loan. The late-payment was as a result of a misunderstanding of the operation of the firm's bank accounts.

The manager of her bank branch had recently arranged to transfer a substantial cash balance held in the company current account to an account that paid interest.

But the taxpayer did not understand that funds that would earn interest would be placed in a separate account or that she would need to take action for the funds to be available to meet cheques drawn on the...