HMRC issued an assessment of income tax due on or before 18 June 2009. As a result of non-payment, HMRC issued a surcharge notice, which the taxpayer appealed against arguing that he had no money to pay the unexpected tax bill as he had sold his business and spent the proceeds.

HMRC conducted a review but upheld the surcharge which the taxpayer further appealed by letter. Again he referred to the sale of a business and suggested that lack of immediate funds be taken into consideration. He also sought to apportion blame to his accountants mentioning his own ignorance and saying he would pay at some point in the future.

Dismissing the appeal, the First-tier Tribunal said it would only set aside a surcharge where the taxpayer had a reasonable excuse for not paying the tax throughout the period of default. The taxpayer had been making returns since 1996/1997 and was thus considered to be experienced with the self-assessment system.

Reliance on his accountant in complying with the tax regime also did not help the taxpayer who had ultimate responsibility to ensure his tax affairs were correctly dealt with.

Also section 59(C)(10) specifically excluded inability to pay as a reasonable excuse. Thus no reasonable excuse existed throughout the default period and the decision was upheld.

The full text of the judgment is available at http://www.bailii.org/uk/cases/UKFTT/TC/2010/TC00603.html