Reasonable excuse for failure to pay APN

The taxpayer implemented an avoidance scheme involving the payment of loan interest in 2008-09. In May 2015 HMRC issued an accelerated payment notice (APN) for the scheme but this was not paid. Consequently three late payment penalties were triggered by reference to the due date five months and 11 months. Eventually the taxpayer entered into a contract settlement with HMRC for the scheme. The settlement was for a much smaller amount (£9 401) than the APN (£53 607) and did not include penalties.

There was considerable confusion about exactly how the APN had been calculated and it appeared that it took into account relief for an earlier year that had not been given.

The First-tier Tribunal decided it did not have the power to amend the APN but could vary the amount used to calculate the penalty.

The judge said the taxpayer was wrong...