Taxpayers entitled to rely on first class post

Posted: 20th September 2012

Penalties imposed on a company for late payment of PAYE and National Insurance have been overturned after the First Tier Tribunal ruled that taxpayers are generally entitled to rely on next day delivery of cheques by first class post.

HMRCIn accepting that the company had a ‘reasonable excuse’ for the late arrival of cheques posted to Her Majesty’s Revenue and Customs in respect of five monthly tax periods, the tribunal stated: ‘It does strike us that this is an area where there ought to be more certainty for taxpayers’.

The company had presented evidence that the cheques were on each occasion posted on the working day before the tax was due and should have been received in time by HMRC in the ordinary course of first class mail.

Lawyers representing HMRC submitted that it ‘would have been prudent’ for the company to have posted the cheques four or five working days before the due date and that it was the company’s responsibility to make sure that payments were received on or before that date.

The tribunal acknowledged that the burden of establishing a reasonable excuse lay upon the taxpayer. However, allowing the company’s appeal, it ruled: ‘We consider that a reasonable employer, having due regard to his responsibilities in relation to PAYE, is generally entitled to rely on next day delivery in the ordinary course of first class post. There is also still a burden on the employer to establish the actual date of posting by reference to cogent evidence.’

Observing that taxpayers are entitled to expect certainty in HMRC’s position on the issue of late payment, the tribunal added: ‘If HMRC do not consider that it is reasonable to rely on next day delivery by first class post we would suggest that they publicise that view in terms and the reasons for it. Taxpayers will then be put on notice that if they rely on next day delivery they are unlikely to have a reasonable excuse.’