Reasonable excuse for failing to submit returns on time

The taxpayer traded as a solicitor and originally incurred penalties of £8 085 for periods May 2023 to November 2023 but these penalties were based on central assessments issued by HMRC in the absence of returns. Once returns had been submitted the total penalty was reduced to £3 227 because the return liability was less than the assessments.

The taxpayer appealed against both the penalty and three penalty points on the basis that she had a ‘reasonable excuse’ for the lateness.

The initial problem for the taxpayer was that she outsourced the bookkeeping for her business to an external firm. The appointed bookkeeper could not do the work properly because they had to isolate due to Covid. The bookkeeper – referred to as ‘bookkeeper 1’ in the case report – could not be confident about the figures produced for these periods hence the taxpayer did not...