Sandra Krywald v The Commissioners for HMRC
Decision date: 7 October 2024
Neutral citation: [2024] UKFTT 895 (TC)
Overall AI summary confidence: high
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
This appeal concerned late-submission penalty points and first late-payment penalties for VAT periods 05/23, 08/23 and 11/23 imposed on a sole principal solicitor who missed returns after her outsourced bookkeeper performed poorly and a successor refused to rectify matters; HMRC also gave incorrect advice about opening balances. The FTT found the appellant had a reasonable excuse for late submissions and that HMRC’s refusal to grant a special reduction was flawed for failing to give reasons and for not properly accounting for HMRC’s own incorrect advice. The tribunal allowed the appeal, set aside the penalties and substituted a decision reducing the late-payment penalties to zero; central assessment surcharges remain to be adjusted once returns and VAT amounts are finalised.
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: medium
Where a taxpayer has relied on an agent or HMRC, that reliance can amount to a reasonable excuse if the taxpayer took reasonable care to avoid the failure and took steps to remedy it without unreasonable delay; and a decision refusing a special reduction of penalties may be flawed where the decision-maker fails to give reasons or to account properly for incorrect advice from HMRC that materially affected the taxpayer’s ability to comply.
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 indicated that “special circumstances” should be given a broad, discretionary meaning and may encompass combined contextual factors (for example, COVID-related staffing problems together with incorrect HMRC advice). The notes also record that central assessments and surcharges were identified as separate issues to be finalised once returns and VAT are settled.