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HMRC internal manual

Compliance Handbook

Penalties for failure to file on time: in what circumstances is a penalty payable: reasonable excuse: overview

A person won’t be liable to a penalty for a failure to file on time, see CH61180, if

  • they satisfy us that they have a reasonable excuse, see CH61540, for the failure, and
  • they put right the failure without unreasonable delay after the excuse has ended, see CH61660.

The onus is on the person who failed to file on time to satisfy us that they had a reasonable excuse at the time of the failure.

There is no statutory definition of reasonable excuse, which is a matter to be considered in the light of all circumstances of the particular case. See the more detailed explanation at CH61540.

What is reasonable will differ from person to person depending upon 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 CH61620, and
  • reliance on another person, but see the exception in CH61640.

If the reasonable excuse for the failure ends, we will treat the excuse as continuing if the person

  • puts right the failure, and
  • does so without unreasonable delay after the excuse ends.

If the person does not put right the failure 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 CH61660. If the person does delay unreasonably then, whatever the reason for the failure, they do not have a reasonable excuse.

If we decide not to accept the person’s excuse as reasonable, they can request a review or appeal. The person may appeal to the tribunal whether or not they request a review. The Appeals, Reviews and Tribunals Guidance (ARTG) contains full details of the review and appeals process at ARTG2100+ for direct taxes and ARTG3000+ for indirect taxes.

If the person had a reasonable excuse for failing to file the return or other document by the filing date and corrected that failure without unreasonable delay, they will not be liable to late filing penalties for the offence.

Sch55/Para 23(1) states that liability to a penalty under any paragraph of this schedule does not arise if the person had a reasonable excuse. The person cannot however have a reasonable excuse where the return has been outstanding for 12 months or more, and you have established that the person failed to file on time in order to deliberately withheld information that would have enabled us to assess their liability. The specific facts and circumstances will determine whether:

  • the person had a reasonable excuse throughout the period of the failure, in which case they cannot knowingly have failed to file in order to withhold information, or  
  • the person deliberately failed to file in order to withhold information, in which case they cannot have a reasonable excuse throughout the whole of the period of the failure.

Only one of the above can apply.

Any late filing penalties that have been charged will be cancelled where we agree to withdraw the notice to file a self assessment tax return on request from a person, see CH61700.

FA09/SCH55/PARA23