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HMRC internal manual

Compliance Handbook

From
HM Revenue & Customs
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Penalties for Failure to Pay on Time: reasonable excuse: when does a reasonable excuse end

Where a person has a reasonable excuse for a failure to make payment on time, they must remedy that failure without unreasonable delay after the excuse ends.

If they do this, we will treat the excuse as continuing until the date when they make payment and will therefore not charge a penalty. If they do not do this, they will not have a reasonable excuse for the failure and therefore we will charge the penalty.

You need to consider carefully the point at which a reasonable excuse ends and the actions the person took after that time to make payment. Each case must be dealt with on its own merits.

In terms of unreasonable delay, there is no statutory definition of ‘unreasonable’. Each case must be judged on its own merits in view of the person’s abilities and circumstances.

Example

No unreasonable delay

Kate was unable to make payment on time due to the death of a family member and, from the information available, we accepted that the bereavement was a reasonable excuse.

Kate made payment two weeks after the funeral.

As Kate had a reasonable excuse for not making payment on time, we judged that, based on the facts of this case, the delay in correcting that failure was reasonable. So the reasonable excuse provision in the legislation applies from the day after the due date and Kate is not liable to a penalty.

Unreasonable delay

Lisa was unable to make payment on time due to the death of a family member and, from the information available, we accepted that the bereavement was a reasonable excuse.

However, Lisa had still not made payment several months after the bereavement.

Although Lisa had a reasonable excuse for not making payment on time, we judged that, based on the facts of this case, the delay in correcting that failure was unreasonable. So Lisa cannot take advantage of the reasonable excuse provision in the legislation and penalties apply from the day after the due date.

The outcome in a case of bereavement could differ depending on the closeness of the relative and all other circumstances. That is why we must deal with every case on its own merits.

FA09/SCH56/PARA16 (2)(c)