Hill and another v HMRC [2026]: a cautionary reminder that instructing advisers does not, of itself, absolve a taxpayer from potential liability for penalties.

Published: 30 September 2026
Authors: Kate Garcia

Summary

In Hill and another v HMRC [2026] UKUT 306 (TCC), the Upper Tribunal held that two taxpayers did not have a reasonable excuse for failing to comply with HMRC information notices, even though a professional adviser had concluded that no action was required.

Background

The taxpayers were the scheme administrators of separate pension schemes. In January 2018, HMRC issued information notices requiring them to provide certain information. After receiving the notices, an intermediary (the scheme operator) instructed tax advisers to advise on the appropriate response.

The advisers concluded that, because the relevant pension schemes had been wound up, the taxpayers were not obliged to provide the information or documents requested. That view was relayed to HMRC on the taxpayers’ behalf. HMRC responded that the notices had been issued to the taxpayers, rather than to the pension schemes, and that the taxpayers therefore remained responsible for complying with them.

HMRC ultimately imposed penalties on the taxpayers for failing to comply with the information notices. The taxpayers appealed against the penalties, arguing that they had a reasonable excuse: they had relied on the consistent advice given to them that they did not need to comply with the notices.

The First-tier Tribunal (FTT) rejected that argument and upheld the penalties. It found that the taxpayers’ reliance on the advice was not objectively reasonable because they had failed to take reasonable care to check or question it.

Upper Tribunal decision

The Upper Tribunal (UT) upheld the FTT’s approach to the question of reasonable reliance on an adviser and dismissed that ground of the taxpayers’ appeal.

The UT held that the FTT was entitled to conclude that the taxpayers’ behaviour fell short of a reasonable excuse. They had failed to check or ask questions of the advice and relied on it without a reasonable basis for believing that the advice was correct.

Essentially, it was too narrow simply to ask whether a taxpayer knew, or ought to have known, that the advice was wrong. That question alone did not determine whether the taxpayer’s reliance on the advice was reasonable.

Instead, a wider assessment was required, including the degree of independent judgement exercised by the taxpayer. In this case, the taxpayers’ lack of engagement meant that they had not taken reasonable care. For example, they had failed to ask obvious questions of their adviser or to request copies of key correspondence. Their reliance on the adviser’s advice therefore did not amount to a reasonable excuse for failing to comply with the information notices.

Practical implications for taxpayers

The outcome may appear harsh. The taxpayers received incorrect advice and were then penalised for acting on it. Taxpayers who seek professional advice, rather than dealing with a matter themselves, may instinctively consider that following that advice provides a reasonable excuse for any liability arising from that advice.

The position is, however, more nuanced. The ultimate question is whether a taxpayer’s reliance on professional advice is objectively reasonable.

To reduce the risk that reliance on an adviser will be regarded as unreasonable, a taxpayer should engage actively with both its advisers and the matter itself. In practice, this should include:

• reading key correspondence relating to the matter
• asking for clarification if anything appears unusual or is unclear
• checking that the factual assumptions underpinning technical advice are accurate. A taxpayer is not expected to understand or verify every aspect of complex technical advice, but should be able to identify and question any factual assumption that appears incorrect or inaccurate
• asking for an explanation if legal arguments or strategy change
• questioning advice that is expressed only in brief terms.

In short, taxpayers are not expected to second-guess their advisers. Blind reliance on them, however, is likely to be viewed unfavourably by HMRC and the tribunals.

A taxpayer who has paid for professional advice may be less inclined to engage closely with the issues or monitor the progress of the matter, on the basis that the advisers are dealing with it. The UT’s decision is therefore a cautionary reminder that instructing advisers does not, of itself, absolve a taxpayer from potential liability for penalties. A taxpayer should remain appropriately engaged with the matter and exercise reasonable care when acting on the advice it receives.