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HMRC internal manual

Compliance Handbook

Penalties for Failure to Notify: Types of Failure to Notify: Onus of proof

It is for the person to show that they have a reasonable excuse. However, if there is not a reasonable excuse, it is for you to show, based on the evidence you gather, that a failure to notify is deliberate or deliberate and concealed or non-deliberate.

You should tell the person that they may be liable to a penalty as soon as you become aware of the failure, even if you have not yet established whether the person has a reasonable excuse for the failure or the seriousness of the behaviour that gave rise to the penalty.

It is particularly important that you do not discuss whether you consider that there is a reasonable excuse for the failure or the seriousness of the behaviour that has led to the penalty until you have established all the facts. At that point, if you consider that

  • the failure was deliberate, see CH72160, or deliberate and concealed, see CH72120, or
  • the person has not offered a reasonable excuse, see CH71500, for a non-deliberate failure, or
  • a reasonable excuse was not remedied without unreasonable delay after it ceased to apply, see CH71660,

you must explain to the person why their actions and the supporting evidence has led you to this conclusion.

You should then invite the person’s comments. If this is dealt with at a meeting, the notes of meeting should record fully what you said and the person’s response. You should offer to send the person a copy of your final notes of the meeting. If during a telephone conversation you become aware that penalties might be due, you should explain and then follow this up by putting your reasons in writing to the person.

Where a penalty is due it is important that you explain to the person what has gone wrong and how they can correct it in the future.

You should apply this guidance in conjunction with the Human Rights Act procedures at CH300000.