Case review: Hill & Ors - is reliance on an adviser reasonable?

This case review was first published in Taxation on 27 august 2026 and the original article can be found here.

Introduction

The case of Hill and Ors v HMRC [2026] UKUT 306 (TCC) addresses whether reliance on professional tax advisers constitutes a “reasonable excuse” in this case, for failing to comply with information notices. The Upper Tribunal delivered a judgement that largely upheld the First-tier Tribunal’s (FTT) findings regarding the lack of reasonable excuse but identified a specific error of law regarding the quantum of penalties.

As an UT judgement, this case is binding on the FTT. The case narrows the definition of reasonable excuse by reliance on an adviser and HMRC is therefore likely to rely on these benchmarks when considering pre-tribunal appeals.

What was the case about?

The two individual appellants, were scheme administrators for two pension schemes. In January 2018, HMRC issued information notices to both individuals, in relation to the pension schemes. At the time, LD acted as the practitioner for the schemes. Upon receiving the notices, LD engaged IT to advise on the matter.

IT corresponded with HMRC in relation to the information notices and HMRC eventually issued a review conclusion letter in October 2018 to IT and the appellants. The letter varied some of the information requested but on the whole upheld the notices.
Within three weeks of the review conclusion, LD advised the appellants of IT’s view that “as the pension scheme had been wound up, there “should be no need to respond” to provide the information”. Consequently, the appellants took no action.

HMRC rejected this position (late November 2018), clarifying that the notices were issued to the individual administrators, not the schemes, and that the winding up of a scheme did not extinguish the administrator’s personal liability to comply. In December 2018, HMRC issued the initial £300 penalties for failure to comply with the information notices. Despite this, the appellants continued to rely on the advice that no action was required. LD advised the appellants that “no action was required in respect of the penalty letters as HMRC had been advised that the pension schemes had been wound up and that IT would “be taking up” the issuing of the penalties with HMRC”.

HMRC subsequently imposed multiple tranches of daily penalties totalling over £10,000 for each appellant, due to their continued failure to comply. Each time the appellants received penalty notices, they forwarded them to LD, who confirmed that “IT were still in communication with HMRC”.

In this time, HMRC (March 2019) wrote to IT and the appellants confirming that “as no appeal had been made to the Tribunal against the Information Notices (at that time), the Information Notices were treated as settled and that further penalties would arise if the failure to comply with the Notices continued”. Despite this, the appellants did not raise any questions about the advice they were given and did not provide the information requested.

The appellants appealed the penalties to the FTT, arguing they had a reasonable excuse because they relied on consistent professional advice.

The FTT dismissed the appeals, finding that the appellants had not taken “reasonable care” in relying on their advisers. The FTT noted that the appellants accepted short, vague emails from LD at face value without asking for copies of correspondence sent to HMRC, questioning changing legal arguments or verifying basic facts such as whether their schemes were in the correct category for appeal.

The appellants appealed to the Upper Tribunal, arguing that the FTT had erred in law by imposing an overly high standard of care. They contended that as laypersons, they were entitled to rely on the technical legal advice provided by their advisers without needing to second-guess it or question its underlying legal merits. They also challenged the FTT’s assessment of the quantum of the penalties, arguing the FTT had misapplied the law regarding the seriousness of the conduct.

What did the tribunal decide?

The Upper Tribunal allowed the appeal in part. It dismissed the appeals regarding the finding of no reasonable excuse (Grounds 1 and 2) but allowed the appeal regarding the quantum of the penalties (Ground 3).

Regarding the “reasonable excuse” defence, the UT upheld the FTT’s decision. The judges rejected the appellants’ argument that reliance on professional advice automatically constitutes a reasonable excuse. The UT confirmed that while a layperson is not expected to understand complex legal arguments, they must still exercise independent judgment and take reasonable care.
The UT found that the FTT was entitled to conclude that the appellants’ reliance was unreasonable because they failed to ask basic questions, did not verify the accuracy of the facts presented to HMRC and ignored clear warnings from HMRC that their position was rejected.

The UT emphasised that “reasonable care” involves checking that the advice is based on correct facts (not the same as checking the technical legal position) and understanding the practical steps being taken on one’s behalf, rather than “blind acceptance” of an adviser’s opinion.

The UT agree that there was an error of law in the FTT’s assessment of the penalty quantum. The FTT had incorrectly referred to paragraph 49A of Schedule 36 FA 2008, which allows for higher daily penalties for “person unknown” notices, to justify that the imposed penalties were not at the top of the seriousness scale.

The UT clarified that paragraph 49A was not applicable to the information notices in this case, which had been issued under paragraph 1, to the individual taxpayer.

What are the key takeaways for tax advisers and their clients?

For clients, the primary takeaway is that relying on an adviser is not a “get out of jail free” card. Taxpayers must remain engaged and proactive. They should request copies of correspondence sent to HMRC, ask clarifying questions if advice appears to change or is vague, and ensure they understand the practical implications of the advice. Passive or ‘blind’ acceptance of advice, particularly when HMRC is actively contesting the position, is unlikely to be viewed as taking “reasonable care.”.

For advisers, the case highlights the importance of clear strategy and detailed communication. Advisers must ensure that clients understand not just the legal conclusion, but that they agree the facts on which it is based. If the facts do not accurately represent the situation, then the advice becomes useless and more importantly, the client will be expected to know this. Vague or brief communications that leave clients in the dark about the strategy or progress of their case can undermine the client’s ‘reasonable excuse’ defence against penalties.

Ultimately, both parties share the responsibility for ensuring compliance; a client’s failure to exercise independent judgement together with an adviser’s failure to provide clear guidance mean the court is unlikely to accept the client had taken reasonable care.

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