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HMRC internal manual

Compliance Handbook

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HM Revenue & Customs
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Dishonest tax agents: file access notice: reasonable excuse: what is a reasonable excuse

A person will not be liable to a penalty if they have a reasonable excuse for failing to comply with file access notice and they remedy that failure without unreasonable delay after the excuse ends.

There is no statutory definition of reasonable excuse, which “is a matter to be considered in the light of all the circumstances of the particular case” (Rowland v HMRC [2006] STC (SCD) 536 at paragraph 18). For example, in Anthony Wood trading as Propave v HMRC (2011 UK FTT 136 TC 001010), the First Tier Tribunal applied this definition in their decision released on 23 February 2011.

A reasonable excuse is normally an unexpected or unusual event that could not be reasonably foreseen or beyond the person’s control, and which prevents the person from complying with the notice. An unexpected combination of events may, together be a reasonable excuse.

It is necessary to consider the actions of the person from the perspective of a prudent person, exercising reasonable foresight and due diligence, having proper regard for their responsibilities under the tax acts.

If the person could reasonably have foreseen the event, whether or not it is within their control, we expect the person to take steps to meet their obligations.

It is not possible to give a comprehensive list of what might be a reasonable excuse. Each depends on the particular circumstances in which the failure or obstruction occurred and the particular circumstances and abilities of the person who has failed. What is a reasonable excuse for one person’s circumstances may not be a reasonable excuse for another person in different circumstances.

If there is a reasonable excuse it must exist throughout the period of default.

CH183560 gives some examples of what could be a reasonable excuse.

The law does specify two situations that are not reasonable excuses. These are

  • shortage of funds, but see the exception in CH183620, and
  • reliance on another person, but see the exception in CH183640.

FA12/SCH38/PARA25