Tribunal Upholds Penalty in Scott Macarthur Case Over Failure to Notify HMRC of HICBC Liability

Citation: [2023] UKFTT 997 (TC)
Judgment on


The First-tier Tribunal (Tax Chamber) case of Scott Macarthur v The Commissioners for HMRC [2023] UKFTT 997 (TC) deals with an appeal against a penalty assessment for failing to notify the liability to the High Income Child Benefit Charge (HICBC). This case elucidates the principles for what constitutes a ‘reasonable excuse’ in the context of failing to notify HMRC of tax chargeability.

Key Facts

The appellant, Scott Macarthur, contested a penalty of £217.08 for not notifying HMRC of his liability to the HICBC for the tax year 2017/2018. While Macarthur accepted the tax assessment and had paid it, he disputed the penalty. No evidence was provided that a letter regarding the HICBC criteria (SA 832) was sent to the appellant, and Macarthur claimed ignorance of his obligation to notify despite the receipt of ‘nudge letters.‘

The appellant knew his spouse claimed child benefit since its initiation. However, his income didn’t exceed £50,000 until the year at issue, primarily due to his wife’s maternity leave. Macarthur’s spouse would have filled out a child benefit claim form stating the criteria for HICBC, which suggests their awareness of the charge. Additionally, nudge letters were sent to the correct address, putting the appellant on notice regarding potential liability to the HICBC.

The central legal principles applied in this case stem from the framework established under Schedule 41 of the Finance Act 2008 regarding penalties for failure to notify HMRC of tax liability. Key considerations included whether the taxpayer:

  1. Was aware or should have been aware of their chargeability,
  2. Had received adequate notification from HMRC, and
  3. Had a ‘reasonable excuse’ for failing to notify HMRC.

The case applied principles from existing case law, including Christine Perrin v HMRC [2018] UKUT 156, which sets out steps to establish a ‘reasonable excuse’, and The Clean Car Co Ltd v C&E Commissioners [1991] VATTR 234, which offers a standard for what a ‘reasonable thing to do’ is for a taxpayer.

William Archer v HMRC [2023] EWCA Civ 626 further affirmed the approach to ‘reasonable excuse’, while Naila Hussain [2023] UKFTT 00545 analysed circumstances under which ignorance of the law could be a reasonable excuse.


The Tribunal found that while the appellant’s spouse was aware of the HICBC through the child benefit claim form, the appellant himself became aware of his potential liability only upon receiving the nudge letters from HMRC. Thus, the Tribunal determined that any ‘reasonable excuse’ ceased upon receipt of those letters. As the appellant did not act promptly following this awareness, the Tribunal upheld the penalty.


The Tribunal’s decision in Scott Macarthur v The Commissioners for HMRC indicates a firm stance on the taxpayer’s responsibility to be informed of their tax obligations. The decision emphasizes the importance of promptly and proactively engaging with HMRC upon learning of potential liabilities. It underscores that while ignorance of law may sometimes constitute a ‘reasonable excuse’, it is not an indefeasible defence, and it ceases to be an excuse once taxpayers are on notice of their obligations.

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