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The Bunker Secure Hosting v HMRC

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In The Bunker Secure Hosting v HMRC [2015] UKFTT 146 (14 April 2015), the FTT found that being unaware of the penalty regime was not a reasonable excuse.

The taxpayer was appealing against penalties for the late payment of PAYE and NICs. It argued that the letter from HMRC imposing the penalties was the first it had received regarding the late payments. It also contended that it had received no generic information from HMRC.

A BillPay statement showed that a payment had been debited from the taxpayer’s account on 20 July (the due date for payment). However, such a payment requires activation three days before the due date; and it had therefore reached HMRC late.

The FTT found that the scheme laid down by FA 2009 Sch 56 gave no discretion, the rate of penalty being simply driven by the number of PAYE late payments. Furthermore, the legislation did not require HMRC to issue warnings; and failure to do so by HMRC did not amount to a reasonable excuse or even special circumstances.

The FTT added that it remained unconvinced that the taxpayer had not received any information and that, in any event, ignorance of the law was not a reasonable excuse.

Finally, referring to Hok [2012] UKUT 363, the FTT noted that it did not have the power to discharge penalties on the ground of unfairness.

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Why it matters: The taxpayer accepted that it was aware of the due date for payment. Therefore, the fact that he was not aware of the penalty regime could not constitute a reasonable excuse.