RK Hosking v The Commissioners for HMRC
[2023] UKFTT 943 (TC)
David Hill & Anor v The Commissioners for HMRC
16 September 2024
[2024] UKFTT 844 (TC)
First-tier Tribunal
Two people didn't respond to tax requests because their advisor said it wasn't necessary. The tax authority fined them. A court said the people should have checked the advisor's advice and acted sooner, so the fines were upheld.
Key Facts
- •Appeals against penalties for non-compliance with Schedule 36 Information Notices.
- •Appellants, Hill and McCracken, were scheme administrators of pension schemes.
- •Liddell Dunbar Ltd (LD) managed the schemes and engaged Independent Tax (IT) for advice.
- •IT advised that no action was needed due to the schemes being wound up.
- •HMRC issued penalties; appellants relied on IT's advice and did not appeal promptly.
- •LD went into liquidation, IT communicated directly with appellants.
- •Appeals were made to the Tribunal after multiple penalty tranches.
- •Appellants argued reasonable excuse based on reliance on IT's advice and complexity of the situation.
- •HMRC argued appellants did not take reasonable care in relying on advice and failed to appeal timely.
Legal Principles
Reasonable excuse for non-compliance with Information Notices under Schedule 36, Finance Act 2008.
Schedule 36 Finance Act 2008, para 45
Approach to determining reasonable excuse: establish facts, prove facts, assess objectively whether facts constitute a reasonable excuse.
Perrin ([2018] UKUT 156)
Reliance on an adviser is not a reasonable excuse unless reasonable care was taken to avoid the failure.
Schedule 36 Finance Act 2008, para 45(2)(b)
Tribunal's jurisdiction on appeals against penalty amounts is a full appellate jurisdiction, not just supervisory.
Schedule 36 Finance Act 2008, para 48(4)
Outcomes
Appeals dismissed.
Appellants did not take reasonable care in relying on their advisor's advice; they failed to check the Information Notices, question unclear advice, or promptly appeal.
Penalties upheld in full.
No reasonable excuse existed, and even if one had existed initially, it wasn't remedied without unreasonable delay. The quantum of the penalties was deemed appropriate given the continued non-compliance.