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HMRC internal manual

Compliance Handbook

Information & Inspection Powers: penalties: when is a penalty chargeable: reasonable excuse: overview

A person won’t be liable to a penalty for a failure to comply with an information notice or an obstruction of an inspection, see CH26220 and CH26240, if

  • they satisfy us that they have a reasonable excuse, see CH26340, for what they have or have not done, and
  • they put right their action or inaction without unreasonable delay after the excuse has ended, see CH26460.

The onus is on the person who failed to comply with the information notice or obstructed the officer in the course of an inspection to satisfy us that they had a reasonable excuse at the time of the failure or obstruction.

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. See the more detailed explanation at CH26340.

What is reasonable will differ from person to person depending on their particular circumstances and abilities. However, there are some excuses that are not normally accepted as reasonable. These are

  • shortage of funds, but see the exception in CH26420, and
  • reliance on another person, but see the exception in CH26440.

If the reasonable excuse for the person’s action (or inaction) ends, we will treat the excuse as continuing if the person

  • puts right the action/inaction, and
  • does so without unreasonable delay after the excuse ends.

If the person does not put right the action or inaction without unreasonable delay after the excuse has ended they remain liable to a penalty.

What is unreasonable delay depends upon the facts and circumstances of each case, see CH26460. If the person does delay unreasonably then, whatever the reason for the failure or obstruction, they will not have a reasonable excuse.

If we decide not to accept the person’s excuse as reasonable and impose a penalty, they can appeal. If the appeal cannot be settled by agreement (with or without a review) the person may notify their appeal to the Tribunal, see the Appeals, Reviews and Tribunals Guidance (ARTG).

FA08/SCH 36/PARA45