A recent Tax Tribunal case is a helpful reminder that getting tax advice over a pint with your mate down the pub might not be the best approach. In the case referred to below, there is no suggestion, however, that is how the tax advice was handed down.
In Madana Saibo Mohamed Hakeem v HMRC [2026] UKFTT 744 (TC), a landlord failed to notify HMRC about rental income over several tax years.
When HMRC eventually issued penalties, Mr Hakeem argued he genuinely believed no tax was due because a friend had told him that rental income below £16,000 was basically tax-free.
The Tribunal was overall unimpressed with the taxpayer’s argument.
The Tribunal’s Key Findings
The Tribunal accepted the failure was not deliberate and noted Mr Hakeem did cooperate once HMRC got involved. So this was not a case of blatant wrongdoing or elaborate tax wizardry.
But they were very clear on one thing:
“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.”
Which is a polite legal way of saying: you can’t just outsource your tax affairs to someone whose advice you cannot show you can rely upon.
The Tribunal also dismissed the idea that financial difficulty changes the rules:
“His financial circumstances may explain his failure to pay; however, they do not provide a reasonable excuse for his failure to notify.”
In other words: struggling financially might explain the situation, but it does not rewrite tax law.
Can Ignorance Of Tax Law Ever Be A Reasonable Excuse?
Sometimes, yes. Tax law is not exactly known for its user-friendly interface.
The Tribunal referred to Christine Perrin v HMRC, which confirmed that ignorance of tax law can, in limited circumstances, amount to a reasonable excuse.
But there is a catch: the taxpayer still has to show they acted reasonably.
Blindly accepting unverified advice from an informal source does not meet that threshold. It may perhaps meet the threshold for “confident but incorrect”.
What Landlords Should Take From This Case
If you receive rental income, HMRC expects you to:
- understand your reporting obligations
- check advice properly
- seek qualified professional guidance where needed
Because the “my mate said it was fine” argument tends to collapse as a viable excuse rather rapidly.
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This page is not legal advice and is not to be relied upon as such. This article is provided for information purposes only. You should take independent advice on the facts of your case. No liability is accepted for reliance upon this post.
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