Taxpayer Had No Reasonable Excuse for Late Appeal, FTT Rules

A recent First-tier Tribunal (FTT) decision has reinforced the importance of understanding and meeting HMRC deadlines when dealing with tax disputes. The Tribunal ruled that a taxpayer had no reasonable excuse for filing a late appeal against discovery and penalty assessments totalling more than £75,000.

The case serves as a reminder that taxpayers should seek professional advice promptly upon receiving correspondence from HM Revenue & Customs (HMRC) to avoid missing key deadlines that could prevent them from challenging assessments.

Background to the Case

In September 2022, HMRC contacted the taxpayer after identifying a potential undeclared source of rental income. A formal information notice was issued, and the taxpayer was granted several extensions of time to respond.

Despite these extensions, he failed to supply the requested information. Consequently, in January 2024, HMRC issued both discovery assessments and penalty assessments, which together exceeded £75,000.

Two months later, in March 2024, the taxpayer wrote to HMRC, but his correspondence was treated as a late appeal. HMRC rejected it on the grounds that no reasonable excuse had been provided for missing the 30-day statutory deadline.

The Taxpayer’s Arguments

The taxpayer claimed that he:

• Did not realise that he had to submit an appeal within 30 days;
• Believed that once he filed updated tax returns showing the correct position, HMRC would cancel the assessments and penalties; and
• Was delayed by HMRC’s slow response to a Subject Access Request (SAR), which he argued prevented him from appealing sooner.

The FTT’s Findings

The First-tier Tribunal rejected these arguments, concluding that:

• The delay, while not extensive, was not trivial, and no satisfactory explanation had been provided.
• The taxpayer’s claim that he did not know an appeal was required was inconsistent with his assertion that he was waiting for additional information before submitting one.
• HMRC’s correspondence had clearly set out the appeal process and 30-day time limit, which the taxpayer had failed to follow.
• Given that he had previously received multiple deadline extensions during the enquiry, he was well aware of HMRC’s time-sensitive processes.

Although the Tribunal acknowledged the financial prejudice to the taxpayer in losing his right to appeal, it noted that he had been given ample opportunity to engage with HMRC over a period exceeding a year and had repeatedly failed to provide the required information.

The FTT therefore refused permission for the appeal to be made out of time.

Key Legal Takeaways

• Strict time limits apply when appealing HMRC assessments or penalties, typically within 30 days of the decision notice.
• A “reasonable excuse” must be genuine, credible, and based on circumstances beyond the taxpayer’s control.
• Ignorance of HMRC’s procedures or failure to act promptly is unlikely to meet the threshold for a reasonable excuse.
• Seeking timely professional advice can prevent missed deadlines and ensure that appeals are properly structured and submitted.

Frequently Asked Questions

Q1: What is a “reasonable excuse” for missing an HMRC deadline?
A reasonable excuse is an event or circumstance that prevented timely compliance, such as serious illness or an unforeseen emergency. It must be supported by evidence and show that the taxpayer acted as soon as reasonably possible once the issue was resolved.

Q2: How long do I have to appeal an HMRC decision?
In most cases, you have 30 days from the date of the decision notice to file an appeal. Missing this deadline may result in your appeal being automatically rejected unless you can demonstrate a valid reason.

Q3: Can HMRC refuse a late appeal?
Yes. HMRC will only accept a late appeal if you can show a reasonable excuse for the delay. If rejected, you may apply to the First-tier Tribunal, which has discretion to allow a late appeal, though only in exceptional cases.

Q4: What is a discovery assessment?
A discovery assessment is issued by HMRC when it discovers undeclared income or gains that may have resulted in unpaid tax. These assessments often arise from compliance checks or third-party data.

Q5: How can I avoid issues like this?
Always act promptly when contacted by HMRC. Seek advice from a qualified tax solicitor or adviser to ensure deadlines are met and responses are accurate and complete.

Contact Us

At Willett & Co Solicitors, our Tax Dispute and Litigation team assists individuals and businesses in resolving disputes with HMRC, including appeals, penalties, and compliance enquiries.

If you’ve received correspondence from HMRC or are unsure about your tax obligations, it’s vital to act quickly. Our experienced solicitors can provide practical, professional advice to help you protect your position and meet all statutory deadlines.