Reasonable excuse for not taking corrective action

In August 2011 Mr and Mrs S bought a farm in the name of Sheibani Llywn a private unlimited company. The property was immediately transferred for free to Askar Sheibani and Comtek Network Systems UK Ltd. Had Mr and Mrs S or Comtek bought the farm in their own names stamp duty land tax at 4% would have been due. However none was paid. The transaction was a sub-sale distribution in specie scheme intended to avoid stamp duty land tax.

After an enquiry HMRC compared the transaction with the stamp duty land tax scheme in Vardy Properties and Vardy Properties (Teeside) Ltd (TC2241) and assessed the company to tax of £22 000.

Eventually after the First-tier Tribunal decision in Crest Nicholson (Wainscott) and others (TC5630) concerning another similar scheme HMRC issued a follower notice and accelerated payment notice to the taxpayer. It imposed a penalty for failure...