John Brady v Commissioners for Her Majesty's Revenue and Customs
Decision date: 24 June 2011
Neutral citation: [2011] UKFTT 415 (TC)
Overall AI summary confidence: medium
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: medium
This appeal concerned late‑payment surcharges (and associated interest) assessed on Mr Brady for 2006–07 to 2008–09 after a PAYE coding error led to under‑deduction of tax. The First‑tier Tribunal allowed Mr Brady's appeal and set aside all surcharges (and interest on those surcharges), finding he had a reasonable excuse both before discovery (reasonable reliance on PAYE deductions) and after discovery (genuine belief he had arranged time to pay with HMRC). The statutory interest on the unpaid tax itself was confirmed as payable and was not disturbed.
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
From the Tribunal's findings, a taxpayer's reasonable reliance on the PAYE system can amount to a reasonable excuse for non‑payment prior to discovering a PAYE coding error, and a genuine, documented belief that a time‑to‑pay arrangement exists with HMRC can amount to a reasonable excuse after discovery; applying those principles, the surcharges were set aside. The Tribunal also observed it could only set aside or confirm surcharges, not adjust them for partial causes.
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: low
The notes record that HMRC operates an internal concession treating some PAYE coding error cases as if the taxpayer had given notice of chargeability (affecting due dates), and that whether small amounts of interest income should be treated as a separate source for notification purposes was raised but not resolved; these points were not essential to the Tribunal's decision.