Key Facts
- •Mr. Wragg's tax return for the year ending 5 April 2022 showed a tax liability of £54,528.27, largely due to capital gains tax from share sales.
- •Payment was delayed because proceeds from the share sale were contingent on a property sale, which experienced delays.
- •Mr. Wragg's agent (Azets) contacted HMRC multiple times to explain the delay and did not seek a Time to Pay arrangement despite HMRC's suggestion.
- •HMRC issued a late payment penalty of £2,656 (5% of the unpaid tax).
- •Mr. Wragg appealed, arguing a reasonable excuse for late payment due to circumstances beyond his control.
Legal Principles
A penalty for late tax payment is payable unless there is a reasonable excuse.
Schedule 56, Finance Act 2009 (FA 2009), paragraph 1(1)
Insufficiency of funds is not a reasonable excuse unless attributable to events outside the taxpayer's control.
Schedule 56, FA 2009, paragraph 16(2)(a)
Reliance on another person is not a reasonable excuse unless the taxpayer took reasonable care to avoid the failure.
Schedule 56, FA 2009, paragraph 16(2)(b)
A reasonable excuse must be objectively reasonable, considering the taxpayer's situation and actions.
Christine Perrin v Revenue and Customs Commissioners [2018] UKUT 0156 (TCC)
A Time to Pay arrangement can prevent a late payment penalty.
Schedule 56, FA 2009, paragraph 10
Outcomes
Appeal dismissed; penalty upheld.
Mr. Wragg's lack of funds was due to the terms of the share sale, which were within his control. His failure to seek a Time to Pay arrangement, despite HMRC's advice and his agent's awareness, was not a reasonable excuse. His reliance on his agent does not absolve him of responsibility as he did not take reasonable care to avoid the failure.