In Morrisroe UK Ltd v HMRC [2015] TC04577 the First Tier Tribunal (FTT) concluded that reliance upon a third party could be a reasonable excuse for failure to make a payment of VAT on time.

Background and legislation

The circumstances of Mr Nair

The decision of the tribunal

Comment

Up till now, reliance upon a third party has never been considered a reasonable excuse in VAT penalty cases.

This decision gives us a new interpretation of reasonable excuse and it could open up the possibility of further claims for reliance upon third parties where that third party has a reasonable excuse. However, the FTT is not a court precedent: another tribunal does not have to follow a FTT decision.

This particular case has its own specific facts.  There was substantial evidence provided as to Mr Nair's activities and movements on the day in question, and it was ascertained that there were back up plans in place which could not be implemented due to the sudden deterioration of events.  

It is likely that future Tribunals would expect precautions against such events to be taken where possible, particularly for larger companies where another individual could complete the Return and submit the payment.

HMRC have leave to appeal this decision.

Link:

Morrisroe UK Ltd v HMRC [2015] UKFTT TC04577