The taxpayer company appealed against a penalty (under FA 2009, Sch 56) for multiple late payments of PAYE during the tax year 2011/12. The periods of delay in payment ranged from 43 days to 9 days.
HM Revenue & Customs (HMRC) stated that the company was essentially a ‘repeat offender’ with a history of poor compliance, which dated from 2007 onwards. The First-tier Tribunal (FTT) had to determine whether the company's insufficiency of funds established a ‘reasonable excuse’ attributable to circumstances outside the company's control (within FA 2009, Sch 56, para 16(2)(a)).
The factor that persuaded the FTT that the company had a reasonable excuse was that its turnover had fallen by approximately 67% (from £6.2 million in 2008 to just over £2 million in 2010), as a result of the termination of substantial contracts with two major clients. This had a sudden and material financial impact
