It's in the post !

Posted: 22nd December 2012

postbox1A taxpayer had reason to be relieved recently when the First-tier Tribunal (FTT) agreed that – contrary to the express warning of HM Revenue and Customs (HMRC) that they are not responsible for postal delays – when there is sufficient evidence that a payment has been posted by first-class post on a particular day, it should be treated as having been made on time (the next day provided it makes the last postal collection) despite having not been received by HMRC until later.

In a case involving penalties for late payment of PAYE, crucial in the evidence given for the taxpayer was the existence of a good system for recording the despatch of the taxpayer’s PAYE cheques. The FTT accepted that payments had been received late. It also accepted that the failure of Royal Mail to deliver the payments was a ‘reasonable excuse’ for late payment. The FTT did not therefore accept the argument of HMRC that the cheques in question should have been posted ‘four or five days’ before the due date.

For most legal purposes, there is an accepted set of rules as to when a document can be regarded as delivered, and most contracts spell that out quite specifically. Government agencies have traditionally relied on their internal systems for determining the date documents have been delivered to them, but this judgment represents a victory for the taxpayer who has reasonably relied on the postal service to meet its normal delivery targets.

It now looks as if HMRC will be forced to withdraw late payment penalties where taxpayers can prove that they took appropriate steps to ensure that remittances were made in time.