Reasonable excuse for failing to comply with APNs

HMRC issued accelerated payment notices (APNs) to the taxpayer in connection with arrangements intended to avoid PAYE and National Insurance. The taxpayer did not pay these within the time limit so HMRC imposed penalties. The company believed the disputed tax would be deferred while it and HMRC negotiated the underlying liability. It also said it had a reasonable excuse for the non-payment. 

The First-tier Tribunal was not satisfied that the taxpayer had requested a deferral; instead there was ‘a simple understanding’ that the tax would not be payable while settlement discussions took place. Further HMRC had not agreed to defer the tax. The taxpayer was therefore liable for the penalty. 

However the judge found that the taxpayer and the HMRC officer running the case were at cross-purposes in that the taxpayer did not appreciate that the officer had no responsibility for the APNs. The director of the company ‘genuinely...