Companies and individuals who fail to pay tax on time are routinely hit with financial penalties – but the law does recognise that there is such a thing as a reasonable excuse. In one case, a company that was plunged into a state of chaos by a key employee’s departure on maternity leave succeeded in overturning a £1,540 penalty.
In the absence of its finance manager, the company, which specialised in fundraising for education, took on a series of temporary replacements whose performance proved disappointing. A satisfactory stand-in was eventually found, but she suffered a personal crisis after her mother was diagnosed with a terminal illness. She eventually left the office to get a cup of coffee but never returned.
The company was also suffering financial difficulties due to invoices not having been sent out on time and the end result was that one of the company’s quarterly VAT bills was paid late and the penalty was imposed. In upholding the company’s appeal, however, the First-tier Tribunal found by a narrow margin that a reasonable excuse for the late payment had been established.