There are so many reasonable excuse cases these days that you barely know where you are. One recurring theme is when a default occurs by reason of the failure of a professional adviser. It is now clear beyond doubt that the important question is whether the taxpayer himself was negligent. He cannot be principally or vicariously liable for the negligence of his professional adviser. The taxpayer is not expected to second guess his professional adviser unless the advice was obviously suspect and that the taxpayer deliberately closed his eyes to what was, or ought reasonably to have been seen as, incorrect advice. In those circumstances, it would not be the advisers negligence being imputed to the taxpayer but his own negligence in relying unreasonably on doubtful advice. This was the substance of the decision in Waseem Shakoor TC 2208 to which reference was made last month.

In Lithgow v HMRC TC 2296 the Tribunal tried to reconcile some of the cases. They explained the circumstances where the taxpayer is protected, and where he is not, when relying on a professional adviser.

The Tribunal drew a distinction between those circumstances where the adviser acts in an advisory capacity (for example in advising on the availability of a relief or exemption), and where the adviser acts as an administrator or functionary (such as filing a document or making a claim within a time limit). The taxpayer is entitled to rely on the advice of the expert professional adviser unless there is reason to believe to the contrary. However, where the adviser merely acts as a functionary in filing a return or undertaking some other administrative task, the negligence of the adviser will not usually provide a defence to a penalty.

However, that is not to say the taxpayer would be left without any remedies. The failure to file a return or meet a deadline by the negligence of the adviser may not provide a defence to a penalty imposed by HMRC - but it is likely to give him grounds for recourse against the negligent adviser.