Court of Appeal elucidates the scope of the “reasonable excuse” defence.

The Court of Appeal has found that Mr Archer did not have a reasonable excuse for not paying his tax late despite judicial review proceedings disputing the liability. Accordingly, the Court of Appeal upheld the surcharges which had been levied by HMRC.

The Court of Appeal took a different approach from the tribunals below, considering that Mr Archer ought not have been expected to produce witness evidence of his understanding of the merits of the judicial review proceedings and the reason for his not paying the tax. The judgments and orders in the judicial review proceedings were, initially, sufficient to found a reasonable excuse.

Ultimately, however, once the Appellant had lost the judicial review proceedings at first instance, Mr Archer needed to adduce further evidence to explain why no payment was made. The Court of Appeal was not satisfied that Mr Archer had a reasonable excuse throughout the period of default and it upheld HMRC’s decisions.

The Court of Appeal’s judgment is available here.

Michael Ripley appeared for HMRC, led by Julian Ghosh KC.