Reasonable excuse for late paid tax

The taxpayer was a QC who had practised for many years. It was accepted that he had always paid his tax liabilities. However for 2012-13 and 2013-14 because of exceptional financial circumstances including the cuts to rates for criminal legal aid and a substantial divorce bill he paid the tax due late. HMRC imposed penalties.

The First-tier Tribunal dismissed his appeal so he proceeded to the Upper Tribunal. He argued that he could not have foreseen the reduction in rates for legal aid nor that his bank would change its lending policy.

The Upper Tribunal said the earlier tribunal had placed ‘strong weight’ on the taxpayer’s ‘long-established practice of paying irregular lump sum instalments to HMRC as and when he could afford to do so out...