Pankaj Kothari v The Commissioners for HMRC

Decision date: 9 July 2026

Neutral citation: [2026] UKFTT 1035 (TC)

Overall AI summary confidence: high

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Short overview

This short overview is intended to summarise the case, issues and outcome so far as they are supported by the judgment.

AI confidence in this short overview: high

Mr Kothari appealed a Schedule 56 late payment penalty of £12,047 arising from unpaid CGT for 2021/22 after a closure notice; the First-tier Tribunal dismissed the appeal and upheld the penalty. The tribunal found no reasonable excuse or special circumstances: Mr Kothari did not prove on the balance of probabilities that lack of liquid funds was due to events outside his control or that he took timely, effective steps to raise funds. HMRC’s refusal to reduce the penalty was found not to be flawed.

Ratio decidendi

This summary is intended to identify the ratio decidendi, meaning the legal reasons for deciding and the binding part of the decision.

AI confidence in this ratio decidendi summary: high

Where a taxpayer relies on insufficiency of funds as a reasonable excuse for late payment under Schedule 56, they must prove on the balance of probabilities that the lack of funds was attributable to events outside their control; scant documentary evidence of attempts to raise funds and unexplained delays will be insufficient to establish such a reasonable excuse.

Obiter dicta

This summary is intended to identify obiter dicta, meaning observations made by the way that were not necessary to deciding the case and are not binding.

AI confidence in this obiter dicta summary: medium

The tribunal noted (obiter) that a taxpayer aware of an impending CGT liability well before legal title passed may be expected to plan earlier to meet tax obligations, and that disputes about HMRC officer visits are irrelevant to the timing-based imposition of a Schedule 56 penalty.

Warning

The chunk contains duplicated and disordered text and some formatting artefacts; care was taken to judgment and condense the tribunal’s findings. Notes contain duplicated, disordered text and formatting artefacts; they may be noisy but contain the tribunal’s core findings.

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