In Leisure Parks Real Estate Limited v HMRC [2020] TC07974, the First Tier Tribunal (FTT) found that a company did not have a reasonable excuse for filing its Corporation Tax return late simply because HMRC cancelled a penalty charged to a sister company in similar circumstances.

  • Leisure Parks Real Estate Limited submitted its Corporation Tax return for the year ended 31 March 2016 over 18 months late, resulting in Late filing penalties totalling £28,233.
    • The company agreed that the penalty was due in principle and that it was correctly calculated.
  • The company’s initial grounds for appeal were that it had a Reasonable excuse for the Late filing as it was unable to confirm certain transactions with a company with which it had a significant trading relationship as HMRC had seized the records of that other company.
    • At the hearing, Counsel for the company advised that those grounds for appeal were not being pursued.
  • Instead, the company Appealed against the penalty on the basis that it must have had a reasonable excuse for late filing because a sister company in the same circumstances had a penalty reduced to nil by HMRC. As HMRC must exercise their powers reasonably, that sister company must have had a reasonable excuse.

The FTT dismissed the company’s appeal finding that:

  • HMRC are entirely capable of making mistakes. Although a penalty charged to a sister company in similar circumstances was reduced to nil, that cannot be regarded as evidence that the sister company had a reasonable excuse. In turn, that does not mean the company in question has a reasonable excuse.
  • Had the original grounds of appeal been pursued, they also would not have amounted to a reasonable excuse. If the company was unable to complete its tax return without access to the records of another company, it follows that the company had failed to keep its own Records as required by law.

Useful guides on this topic

Penalties: Late Filing
Late returns can be subject to a mix of fixed and tax geared penalties. What penalties apply for late filing? Which penalty will apply and when? 

Appeals: Grounds for Appeal Toolkit
What grounds are there to appeal a tax penalty? How can you word a tax appeal? Can you appeal HMRC errors? What is a reasonable excuse?

Grounds for Appeal: Reasonable excuse
What is considered to be a 'reasonable excuse' when a taxpayer makes an appeal against a tax compliance failure?

How to appeal an HMRC decision
What type of decision can you appeal? What are your different options when you disagree with HMRC? What are the key steps in making an appeal?

External link

Leisure Parks Real Estate Limited v HMRC [2020] TC07974


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