A rare ‘reasonable excuse’ win for taxpayer

Using an advisor to support with your VAT or tax issues is clearly the most sensible path, however it is not generally accepted as a ‘reasonable excuse’ when it comes to missing filing deadlines.

That said in a recent FTT case, a judge found in favour of a taxpayer finding that there were exceptional circumstances.

HMRC had issued the sole shareholder of PS Gill Construction Ltd with a personal liability notice of £1.8m for deliberate inaccuracies in VAT returns made over numerous VAT periods.   In December 2022 a notice of appeal was filed with a tax advisory firm appointed as representative.  Both the FTT and HMRC accepted this and proceeded to communicate only with this firm, rather than the shareholder itself.

This is where the failings occurred, whereby the representative did not answer or forward on correspondence over several months, which resulted in the shareholder’s appeal being struck out.  In February 2024 HMRC wrote directly to the shareholder to advise of this fact and it is only at this point did matters fully come to light. 

The shareholder believed that everything was simply held up awaiting a hearing and subsequently reconnected with the advisor to request a reinstatement of the appeal.  HMRC rejected this which led to a FTT hearing on the matter.

Normally the shareholder would be expected to check in with the advisor, however the FTT took into account the shareholder’s wife had gone through life-threatening medical conditions and events which the judge felt was understandable why they would not have chased.  This resulted in the FTT accepting the reliance-on-advisor citing that “the reasonable taxpayer in Mr Gill's position would not be keeping tabs on his adviser to make sure the appeal was on track”.

This case serves as a reminder that businesses can rely on reasonable excuses in truly exceptional circumstances.