Mr Delay’s delay penalty

Mr Kuldeep Delay was a participant in a tax avoidance scheme. He was served with an accelerated payment notice (APN). Along with others, he was a party to judicial review (JR) proceedings challenging the validity of the APN. The application for JR was dismissed in the High Court but permission has been sought to appeal to the Court of Appeal.

It is reported that pending resolution of the JR proceedings, HMRC agreed that they would not take steps to enforce payment of the amount specified in the APN. Very fair and large, one would say. It was surprising, illogical and disappointing, then (to say the least), that HMRC nonetheless took proceedings to collect a penalty for failure to pay the amount of tax that they had agreed not to collect.

Mr Delay duly appealed to the First-tier Tribunal. One might have thought that the fact that the Courts hadn’t yet finally determined whether the APN was valid (not to mention the fact that HMRC weren’t actually seeking to collect the amount due under it) might be considered a reasonable excuse for not paying it. But Mr Delay chose to make his appeal not on the grounds of having a “reasonable excuse” for non-payment but on the grounds that the APN regime itself was unsustainable on human rights grounds so that it followed that the penalty was also unsustainable. Predictably, the Tribunal held that it had no power to entertain an appeal on these grounds and it struck it out.

We will never know for sure if an appeal on “reasonable excuse” grounds might have succeeded. But the judge’s analysis gives us a clue as to how the Tribunal might have approached such a claim: “if Mr Delay wanted to make an argument based on “reasonable excuse”, he might have applied to the Tribunal for the appeal to be stayed until a court had finally determined whether the APN was lawfully issued or not”. We would go further than that: what more reasonable excuse could there be for not paying an alleged debt (whether for tax or anything else) than the existence of a genuine continuing unresolved dispute as to whether the debt is, as a matter of law, payable?



Sam Inkersole

In 2022, Sam won the Taxation’s Rising Star award at the Taxation Awards in and was named in the Accountancy Age 35 Under 35.

Jon Wedge

While Jon’s client work focuses on the financial services sector, he also oversees the firm’s assurance service, as well as supporting the trainees following in his footsteps.


Elana joined us in 2017 as an ACA trainee, after graduating from Durham University where she had studied languages. She is now a manager in our assurance team.


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