In the case of Hakeem v HMRC [2026] UKFTT 744 (TC), the FTT has dismissed an appeal against penalties for failure to notify liability to income tax in respect of property income. The FTT judged that the Appellant did not have a reasonable excuse for the failure to notify.
INCOME TAX – penalties for failure to notify liability to income tax – whether appellant had reasonable excuse for failure to notify – principles in Christine Perrin considered and applied – appeal dismissed
The Appellant had intimated in his appeal that his financial situation, debt and the additional financial burden caused by the penalties would amount to a reasonable excuse, but the FTT noted that:
“Although what amounts to a reasonable excuse is not defined in the legislation, circumstances which do not, are expressed in sub-paragraph 20(2) of Schedule 41 to FA 2008. One of those is an insufficiency of funds.
Mr Hakeem’s financial circumstances may explain his failure to pay; however, they do not provide a reasonable excuse for his failure to notify. The obligation to notify is a separate statutory requirement, and his financial situation does not explain or justify non-compliance with that obligation.”
The Appellant also argued that he had received incorrect advice from a friend that the income, being below a £16,000 threshold, was not chargeable. The FTT noted that Perrin had established that “ignorance of the law can in some circumstances be an objectively reasonable excuse, ‘taking into account the experience and other relevant attributes of the taxpayer and the situation in which the taxpayer found himself at the relevant time’.” However, considering the matter, the FTT concluded that:
“Mr Hakeem submitted that he had relied on advice given to him by a friend, namely that no income tax would be chargeable if his annual rental income was less than £16,000. However, he made no submissions as to any qualifications, expertise, or other attributes of this individual that would render such reliance reasonable. Nor did Mr Hakeem provide any explanation as to why he failed to verify this advice by undertaking his own enquiries or otherwise exercising due diligence. …
… We agree with HMRC that it was not objectively reasonable for Mr Hakeem to rely on informal advice from an unqualified friend, in the absence of any attempt to verify its accuracy.
In those circumstances, we find that Mr Hakeem has failed to discharge the burden of establishing a reasonable excuse. His ignorance of the requirement to notify his liability, and his reliance on unsubstantiated advice, do not amount to a reasonable excuse.”
https://caselaw.nationalarchives.gov.uk/ukftt/tc/2026/744
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