Too ill

The taxpayer employed one person. He relied on his friend and accountant M to deal with his tax and PAYE affairs.

M did not submit the taxpayer’s 2010/11 PAYE return due to illness and HMRC imposed penalties against which the taxpayer appealed.

The Revenue argued that the taxpayer was aware of M’s declining health and should have taken steps to ensure his tax obligations were discharged.

The First-tier Tribunal accepted the tax authority’s point but said the accountant’s well-being “clearly deteriorated much more markedly in the later stages of 2010 and into 2011”.

The legislation made clear that reliance on a third party did not on its own offer reasonable excuse – but the accountant’s illness rendered him incapable of carrying out the work he was engaged to do.

The tribunal also took into account that HMRC had accepted M’s illness as reasonable excuse in another case....