Cheques: Should be posted in good time
A law firm has lost an appeal against a penalty imposed by HM Revenue & Customs (HMRC) for the late payment of tax under PAYE.
Judge Marilyn McKeever in the First-tier Tax Tribunal noted [1] that Sheffield firm Best Solicitors had had previous problems with payment by cheque.
She said: “This was their seventh default in the tax year and penalties had previously been charged. A conscientious taxpayer would have made quite sure they posted their cheque in good time before the deadline, or would have made payment electronically which gives them extra time and is not susceptible to postal delays.”
Best Solicitors appealed against the penalty of £416, or 2% of the £20,805 in income tax and National Insurance contributions due for the month ended 5 November 2019.
The firm contended that it made payment by cheque “in accordance with the time frame given”, but that HMRC failed to present the cheque in a timely manner and indeed initially denied receiving it.
The firm paid again, electronically this time, after which the cheque was cashed, and it argued that the default was caused by HMRC’s “poor practices”.
The second payment was credited against the firm’s payments for January and February 2020.
Judge McKeever said that Best Solicitors had 14 days from the end of the period to pay the tax – ie, 19 November 2019 – but HMRC’s records showed that the cheque was only received on 11 December. It was not banked and cleared until February 2020.
“The appellants have not provided any information as to when they posted the cheque, other than saying that payment was made ‘in accordance with the time frame given’. They do not say what time frame they were working to.”
Best Solicitors had failed to put forward a reasonable excuse for the delay, she went on. “They have provided no indication of why payment was late. They have not said when they thought payment was due or when the cheque was posted. Their only submission, unsupported by any evidence, is that they ‘made payment in accordance with the time frame given’.”
While it was “regrettable” that HMRC delayed in presenting the cheque and its actions led to a second payment being made, “it does not alter the fact that the November 2019 PAYE payment was already late when these things happened (or did not happen). These subsequent events cannot affect the validity of the penalty for late payment which was already due”.