Duty of care not fulfilled

The taxpayer company appealed against penalties for late payment of PAYE during 2010/11. Its adviser explained that the business was in financial difficulties but had done everything it could to save itself from liquidation. It had met all its tax liabilities by borrowing and careful management.

Although insufficiency of funds could not in itself constitute a reasonable excuse the cause of the insufficiency could the adviser argued. The causes of the taxpayer’s problem were the unexpected loss of one-third of its business and the bank reducing its overdraft and credit facility.

The adviser also claimed HMRC had failed to provide a duty of care by not warning the taxpayer about penalties that would be imposed for late payment of PAYE.

The First-tier Tribunal found the taxpayer had acted carefully in trying to pay its bills and keep going. The judge accepted that the Revenue contributed to the taxpayer’s...