Illness is a reasonable excuse

The taxpayer company appealed against penalties imposed for the late payment of PAYE tax and National Insurance in 2010/11.

One of the directors Mrs Fisher had been diagnosed with cancer during the year and died in March 2011. She had tried to cope with her duties as best as she could.

Her daughter also worked for the business but was not experienced in PAYE matters. The other director was busy with extra responsibilities to keep the company going.

HMRC said the Mrs Fisher’s cancer was not a reasonable excuse because the taxpayer firm had two directors and alternative arrangements should have been made.

The First-tier Tribunal accepted that the illness placed a great strain on the company – and it was difficult for cheques to be signed in Mrs Fisher’s absence because she was the sole signatory for much of the time.

The judge concluded that...