First Tier Tax Tribunal Finds Illness Is Not An Excuse For Late Filing

In the recent case of Legends Leisure Ltd v Revenue & Customs, the first tier tribunal have found that the illness of a family member is no excuse for late filing of pay as you earn (PAYE) real time information (RTI) returns.

Despite the fact the appellant (Legends Leisure Ltd) never made a formal appeal to HMRC and any appeal would have been a late appeal, in the interests of justice, HMRC accepted the appellant’s notification of appeal to the tribunal as a late appeal. The Appellant’s claim was that due to the ill health of the company administrators’ mother, she had been affected to the extent that she was unable to complete and submit the returns on time.

HMRC’s records show at least seven failings to deliver RTI returns on time by the company during this period. It was also noted that for earlier appeals, HMRC had in fact waived the penalty for late filing

HMRC’s letters

In a letter dated 27th December 2018 that HMRC had sent to the appellant, it included the following statement:

“Important Information

PAYE information must be reported to us on or before a payment is made to an employee or we may charge you a penalty”.

In a further letter dated 20th August 2019 to the appellant HMRC indicated that:

“I have on this occasion cancelled the penalties, however if any more returns are submitted late the penalties won’t be cancelled.

An education letter was issued to you earlier in the year which tells you when the returns need to be submitted, on or before the payment dates.

If you continue to submit late penalties will be issued”.

Following these letters HMRC issued penalties for the periods ending 5th November 2019, 5th December 2019 and 5th January 2020. The penalties related to RTI returns which were submitted after the payments where made to employees.

The Tribunals Findings

The first-tier tribunal found that:

  • HMRC had correctly assessed and notified the appellant of the penalties.
  • Despite the fact that, the judge sympathised with the appellant’s situation. They found that HMRC had been more than generous previously with appeals and the appellant had failed to ensure that alternative arrangements were made.
  • As such the tribunal found that the appellant had no reasonable excuse, nor did the case have any special circumstances. As such the appeal was dismissed.