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Director’s Illness was ‘Reasonable Excuse’ for Tax Default

A company has triumphed in its appeal against a £900 penalty imposed in respect of late filing of its annual return after the First-Tier Tribunal accepted that its principal director’s illness during the whole of the relevant period amounted to a reasonable excuse for the default.

The company’s sole activity was to hire out its assets to a wholly-owned subsidiary which went into administration. Its operational director was barred from entering the business premises and all the company’s post, including two penalty notices sent by Her Majesty’s Revenue and Customs, was diverted to the administrators.

The director, who was off work for a considerable period due to illness, thus had no access to the company’s post or business emails. He had expected the annual return to be filed by the company’s accounts department in the ordinary way and, upon belatedly realising that this had not been done, he took urgent steps to file it the following day. Overturning the penalty, the tribunal found that, in the unusual circumstances of the case, a reasonable excuse had been established.