Data gathering: penalties: reasonable excuse: how will HMRC be satisfied a reasonable excuse exists
You will have to establish how a failure occurred in order to decide whether the circumstances surrounding that failure provide the data-holder with a reasonable excuse for not complying with the data-holder notice.
There are many different circumstances that may represent a reasonable excuse for the failure. Each case must be considered on its own merits and you need to take into account the data-holder’s abilities, circumstances and experience.
The onus is on the data-holder to satisfy you that they have a reasonable excuse. They must tell you the reason and you must listen carefully to what you are told. You should consider the explanation carefully taking into account all the circumstances and available information.
The circumstances of each individuals case will determine whether you need supporting evidence and, if so, what that will be.
You must ensure that any request for evidence you make is reasonable and proportionate. If you need to ask for information you must apply this guidance in conjunction with the HRA procedures at CH21360.
Whether there is a reasonable excuse is a matter of judgement.
- If you consider the excuse to be reasonable you must accept it.
- If you do not consider that the person’s arguments represent a reasonable excuse then you must tell the person and give them the opportunity to provide further argument and/or evidence as to why they have a reasonable excuse before you give notice of your decision. Your letter notifying the person of your decision must also advise them of their appeal and review rights in accordance with the Appeals, Reviews and Tribunals Guidance at ARTG2100 for direct taxes. ARTG15000 contains standard wording for explanation letters.