Insufficiency of funds does not excuse late payment

The taxpayer incurred nine defaults for late payments and submissions of returns in the periods leading up to the January 2023 period that was the subject of the appeal. For this period he incurred a default surcharge based on the maximum 15% of the tax paid late.

The taxpayer said he had a reasonable excuse. First his business of letting out property suffered problems during the Covid-19 pandemic because his tenants stopped paying rent and could not be evicted. Second a connected business All Outdoor Ltd encountered problems requiring him to meet personal guarantees linked to the company and also pay legal fees.

HMRC’s view was that ‘insufficiency of funds’ is cited in the legislation as an example of when a ‘reasonable excuse’ for a late payment is denied. The other exclusion is when a return or payment has been submitted late due to...