Obligations fulfilled

The taxpayer was a two-partner firm with two employees. It was late filing its employer’s annual return for 2010/11 leading HMRC to impose a penalty against which the business appealed.

It was explained that one of the partners had been very ill and the firm was suffering financially and had ceased trading in December 2010 when the partnership made its employee returns and paid all outstanding business and employee tax.

It also informed HMRC about the closure. It had not occurred to the partners they would still have to file an end-of-year return even though they had already complied with their tax obligations. They filed a return immediately after they realised one was due.

The First-tier Tribunal accepted that the partnership had a reasonable excuse for the late-filed return. The partners had acted “quite properly” with regard to their responsibilities when they closed the business ...