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HMRC internal manual

Company Taxation Manual

CTSA: penalties for late returns: reasonable excuse: grounds

TMA70/S118 (2)

On the first occasion that a company claims that a return has gone astray accept its word, unless there is evidence in the file that throws real doubt upon the claim.

On any subsequent occasion ask the company to substantiate the claim. Accept it only if examination of the available information shows that the return was posted in time to be delivered on the filing date.

Although ignorance of the law is no excuse, give sympathetic consideration to a claim whenan inexperienced director fails to comply with the regulations and he rectifies the fault as soon as he recognises it. He may claim, for example, that an agent gave him incorrect or misleading advice.

This approach must be distinguished from simple reliance on ignorance of the law, for instance of the filing date, which is not acceptable.

It will not be a reasonable excuse to claim that:

  • failure is due to a dilatory agent,
  • information relevant to the return is not available at the filing date,
  • the affairs of the company are too complicated to enable the return to be completed in time,
  • the responsible director is too busy running the company’s business,
  • there is no intention of avoiding tax, or of deferring payment of tax,
  • the company is not liable to tax for the period for which the return is required, or has overpaid tax,
  • the company is not a commercial enterprise.

Contact Tax Administration Litigation & Advice (TALA) if doubts remain about the validity of the claims once you have ascertained all of the facts.