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HMRC internal manual

Compliance Handbook

Penalties for Failure to Notify: in what circumstances is a penalty payable: reasonable excuse: overview

A person won’t be liable to a penalty for a non-deliberate, see CH72200, failure to notify, see CH71220, if

  • they have a reasonable excuse, see CH71540, for the failure, and 
  • they put right the failure without unreasonable delay after the excuse has ended, see CH71660.

Reasonable excuse does not apply where the failure is deliberate, see CH72120 and CH72160.

The onus is on the person who failed to notify 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 the circumstances of the particular case. See the more detailed explanation at CH71540.

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 CH71620, and
  • reliance on another person but see the exception in CH71640.

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 CH71660. If the person does delay unreasonably then, whatever the reason for the failure, they will 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 contains full details of the review and appeals process at ARTG2100+ for direct taxes and ARTG3000+ for indirect taxes.