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HMRC internal manual

Claimant Compliance Manual

From
HM Revenue & Customs
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Penalties and interest: failure to notify changes of circumstances - reasonable excuse

Section 32(3) penalties will not be imposed where there is a reasonable excuse for a person’s failure to notify the change of circumstances. There is no statutory definition of reasonable excuse and you will need to judge each case on its own merits. The following are some of the situations that might constitute reasonable excuse:-

  • the notification was lost or delayed in the post because of an unforeseen event disrupting the postal service for example fire or flood at the sorting office where the form would be held or prolonged industrial action
  • serious illness preventing the person from handling their private affairs, for example coma, major heart attack, stroke, serious mental or life threatening illness. If they are simply in hospital for a long time they must make arrangements to handle their affairs
  • serious illness of close relative if it is taking up almost all of their time and attention
  • bereavement of close relative or domestic partner

A reasonable excuse is not that they have been too busy or did not understand what was required.

Where there is a reasonable excuse for not notifying a change of circumstances the person is expected to meet their obligations as soon as it is reasonable to do so. Where you accept there is a reasonable excuse for not notifying a change of circumstance then there is deemed to have been no failure. This will not count as a failure for the purposes of calculating any future penalties.

Example

Claire is a single customer and a change of circumstances in her household make-up occurs on 19 May 2010. Claire is required to notify the change by 19 June 2010 but on 1 June Claire becomes critically ill and is taken into hospital where her condition remains critical for 6 weeks. Claire therefore has a reasonable excuse for not notifying her change of circumstances by 19 June 2010 but we would expect her to have notified the change as soon as she was well enough to attend to her affairs. Depending on the nature of her illness this might be by late July or even a little later. It does not mean her obligations cease completely.