The relevant law on whether there is reasonable excuse for a civil penalty to be withdrawn or reduced is contained in the Finance Act 1996, Schedule 5, paragraph 25 – see LFT19010, under the ‘Mitigation of penalties’ heading.
We do not have any Tribunal case histories that would help us to
establish what is and is not considered a reasonable excuse for any
of the Landfill Tax penalties.
In considering “reasonable excuse” we can turn to
VAT cases for some initial guidance. The concept of what
constitutes a ‘reasonable conscientious businessman’
was first defined by a past President of the VAT Tribunal, Judge
Medd OBE QC in the appeals of Appropriate Technology and The Clean
Car Company.
In the case of Appropriate Technology, (LON/90/1350X) Judge
Medd asked himself the following question:
“Would a reasonable conscientious businessman who knew
all the facts of the case as I have set them out, and who was alive
to and accepted the need to comply with one’s
responsibilities in regard to the rendering of VAT returns,
consider that the Appellant Company, in acting as it did in the
circumstances in which it found itself, had acted with due care in
the preparation of its return?
If such a businessman would reach the conclusion that the
tax-payer had acted with proper care, then I would consider that
the tax-payer should be regarded as having a reasonable
excuse”.
Our policy is that unless a business can show that it was
alive to and accepted the need to comply with its LT
responsibilities, then no reasonable excuse exists. It should be
noted that ‘reasonableness’ refers to the conduct of
the business, not to the error made.
Judge Medd further expanded the concept of the reasonable
conscientious businessman in The Clean Car Company Ltd case,
(LON/90/138X), when he said:
“One must ask oneself: was what the tax-payer did a
reasonable thing for a responsible trader conscious of and
intending to comply with his obligations regarding tax, but having
the experience and other relevant attributes of the tax-payer and
placed in the situation that the tax-payer found himself at the
relevant time, a reasonable thing to do? Put in another way which
does not I think alter the sense of the question; was what the
tax-payer did not an unreasonable thing for a trader of the sort I
have envisaged, in the position that the tax-payer found himself,
to do?
It seems to me that Parliament in passing this legislation
must have intended that the question of whether a particular trader
had a reasonable excuse should be judged by the standards of
reasonableness which one would expect to be exhibited by a
tax-payer, but who in other respects shared such attributes of the
particular appellant as the Tribunal considered relevant to the
situation being considered.
Thus, though such a tax-payer would give a reasonable
priority to complying with his duties in regard to tax and would
conscientiously seek to ensure that his returns were accurate and
made timeously, his age and experience, his health or the incidence
of some particular difficulty or misfortune and, doubtless, many
other facts, may all have a bearing on whether, in acting as he
did, he acted reasonably and so had a reasonable excuse”.
In Landfill Tax, nothing is ruled out as a reasonable excuse.
You should look at each case on its merits.
(This text has been withheld because of exemptions in the
Freedom of Information Act 2000)
