Tribunal: Reasonable excuse for late payment

The Tribunal has found in favour of a taxpayer who appealed against a late payment surcharge.

The taxpayer was an employee subject to the PAYE system. He had received and had completed self assessment tax returns during the 1990s because he had investment income to declare and expenses to claim. The issue of these forms had then ceased, and forms P810 were issued and completed instead.

In April 2008, the taxpayer received a tax review form P810 for 2007/08, which he completed and returned to HMRC on 25 September 2008. On 13 January 2009, HMRC wrote to the taxpayer stating that, although he had completed a form P810, he had to complete a self assessment tax return, and this was subsequently issued to him about two weeks later. It included the standard statement that the deadline for submission of the return was three months later (effectively 29 April 2009).
The page SA102 was missing. After the taxpayer obtained the missing page, he submitted the form on 13 April 2009 with a covering letter.

On 19 June, HMRC issued a calculation showing a tax liability of £4,390. The taxpayer had not previously received a bill of such an amount and was confused as to how this had arisen. The Revenue’s helpline was unable to assist, and when the taxpayers visited the department’s Hull office on 15 June he was told the computer ‘was down’.

Consequently, the taxpayer had to obtain advice from an accountant, having done so he paid the tax on 20 June 2009.

The taxpayer appealed against HMRC’s issue of a surcharge of £219.52, claiming he had a reasonable excuse for late payment. The Revenue’s review upheld the charge and the case went to the Tribunal.

The judge held that the taxpayer had genuinely attempted to sort out his tax affairs, to return documents promptly, and to pay the tax properly due from him. He had been misled by the lack of clarity and ambiguity in the documents he received from HMRC. Accordingly the taxpayer had a reasonable excuse throughout the period. The surcharge was consequently discharged and ordered to be repaid to the taxpayer.


Case Studies

The Tax Man

Minimise the stress of an investigation and make use of our extensive experience in securing best outcome for our clients

Business Valuation in Distress

Take advantage of our impartial and rigorous due diligence procedures

FD in The Cupboard

Our innovative ideas are here to improve your business performance and secure appropriate and cost effective funding

The Tax Man

The Tax Man

A new client was introduced to us via a recommendation with whom we arranged to meet on a regular basis in order to determine a number of changes that we felt were needed to their business structure. The client was at the time operating as a husband and wife partnership. The business was flourishing and had a number of large contracts with big organisations.

At the start of the process they were still heavily immersed in their day to day operations so we can get a full flavour for their ambitions, aspirations and growth plans. We quickly recognised there were sufficient tax savings which can be achieved by changing the structure from a partnership to a corporate entity. We carried out a business valuation and disposed of the goodwill from the old to the new business. Unfortunately, as often is the case with efficient tax planning, HMRC got involved and disputed our valuation.

An HMRC investigation can be a very stressful time for any client, even for those best prepared. However, our client had minimal input in the HMRC communication as we dealt with this professionally behind the scene. As an added benefit, our client could rest on the security that all work was covered by insurance and therefore all costs and time in dealing with this enquiry were covered by the fee protection policy we had put in place.

The initial approach taken by HMRC was very aggressive and they tried to present an argument that there was no goodwill in the business. We challenged HMRC’s view that the goodwill was worthless. After lengthy correspondence and numerous telephone calls, HMRC agreed 100% with our original valuation, which preserved our original tax saving plan for the client. Tax savings on this case where in the region of £75K at the outset, with ongoing savings of £6,000 per annum. We are pleased to add another happy client to our portfolio.

Business Valuation in Distress

Business Valuation in Distress

Selling a business is never an easy process, but when disputes arise, the need for a reliable third party due diligence process is even greater.

Tearle & Carver have extensive understanding of the requirements for remaining objective when managing a potentially difficult company buyout. In one such case, we were approached by the courts to act as independent accountant for an acrimonious business sale in which one partner was exiting the business and selling shares to the other. Given the circumstances, both sides had totally polar views of what their business was worth.

After arranging an initial meeting with the company, we were thorough in ensuring we completed due diligence, validating the figures in the accounting records, carrying out adjustments where appropriate, and drafting a set of reliable management figures within the framework required by the court.

A draft version of the report detailing our findings and conclusions was submitted to both parties, giving them the opportunity to voice any queries or concerns and ensure all relevant factors had been taken into account.

Through this process, we were able to submit a final report to the courts that was both binding and acceptable to both parties, effectively resolving what could otherwise have been a time consuming and costly process for all sides.

FD in The Cupboard

FD in The Cupboard

For smaller companies, it is often not possible or cost effective to pay for a full-time Financial Director.
Many of our clients therefore make use of Tearle & Carver’s extensive expertise to provide the services of an FD as and when required.

In this case, we were approached by the management team of an organisation looking to acquire the existing business via an MBO (Management buy out). Their business plan had proved ineffective for securing funding, and what they needed was financial expertise from someone with a developed understanding of the company’s internal workings.

Tearle & Carver helped deliver the solution our clients were looking through utilising our bank contacts in order to make the MBO viable, while also building a robust business plan and preparing our client for the rigorous vetting process. To help with cash flow issues, we introduced factoring which led to improved cash flow management.

We advised on the appropriate business valuation and structure, and continued to prepare monthly accounts to track profgress once the management were fully in command of all the information they needed to move their business forward.

In order to best assist these clients through the crucial first year of ownership, we attended board meetings on a regular basis, a service that we continue to provide to date.

With our continually developing understanding of their business, this client is able to remain confident that Tearle & Carver can provide any financial support they may need, now and in the future.