The appellant company was late in paying its monthly PAYE and Class 1 National Insurance contributions liabilities for each month of the tax year 2012/13. HMRC imposed a late payment penalty of £74,418 (under FA 2009, Sch 56). The appellant appealed.
The first issue for the First-tier Tribunal (FTT) was whether the penalty was criminal, for the purposes of Article 6 of the European Convention on Human Rights. The FTT concluded that tax penalties are normally ‘criminal’ for the purposes of Article 6. The case therefore fell under Article 6, which meant that the burden of proof was on HMRC to show that the payments were late, i.e. that a penalty was due. However, HMRC had met this burden.
The FTT next considered whether the appellant had a reasonable excuse for failing to make one or more of its PAYE payments on time (within FA 2009, Sch 56, para 16(1)): (a) because of financial, economic and cash flow;
