No funds

Reasonable excuse for late paid PAYE

The taxpayer was a school that fell into financial difficulties. It paid late several of its PAYE monthly liabilities during 2012/13 and HMRC imposed penalties under FA 2009 Sch 56.

The taxpayer appealed. It said it had had cash flow difficulties since the economic downturn when bad debts were created as a result of parents being unable to pay the school fees.

The First-tier Tribunal said the economic downturn could not on its own be a reasonable excuse for insufficiency of funds to pay the tax. However in 2012/13 there were two specific underlying causes for the lack of funds. First was the loss of 15 pupils from the beginning of the 2012/13 academic year which was three times the normal attrition rate. The loss of fee income was aggravated by increased costs as a result of staff sick leave....