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HMRC internal manual

Construction Industry Scheme Reform Manual

Compliance: Overview & ‘Reasonable excuse’: Establishing the facts

Statute does not otherwise define what a ‘reasonable excuse’ is. You should consider all claims on their merits. Honesty of purpose is a preliminary condition that a customer always needs to fulfil. HMRC’s view is that whether a customer has a ‘reasonable excuse’ depends upon the particular circumstances in which the failure occurred, as well as the particular circumstances and abilities of the customer who has failed in their tax obligations and that the customer put right the failure(s) without undue delay after the period of time the ‘reasonable excuse’ existed came to an end. You need to establish all of the relevant facts, including

  • the circumstances which led to the failure to submit the payment or return on time
  • the extent to which appropriate preliminary work had been put in hand before the excuse prevented further progress
  • at what date did the ‘reasonable excuse’ start and end and what bearing do these dates have with the due dates of the obligations that have been missed, or the dates that the return(s) was due to be filed
  • when the necessary steps were taken to remedy the failure after the excuse had ended.

You will have to establish how a failure occurred in order to decide whether the circumstances surrounding the failure provide the person with a reasonable excuse for the failure.

There are many different circumstances that may represent a reasonable excuse. Each case must be considered on its own merits and you need to take into account a person’s abilities, circumstances and experience.

The onus is on the person to satisfy you that they have a reasonable excuse. They must tell you the reason and you must consider the explanation carefully taking into account all the circumstances and available information.

In some cases it may be reasonable to seek evidence to support some or all of the person’s arguments. The circumstances of each individual 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.

When you have established all of the facts you will be able to compare this with the TTQT failures identified during the ‘Qualifying period’, or the CIS Monthly returns that have been submitted late to see whether the period of the ‘reasonable excuse’ coincides with the dates of the failures to make payments or send returns in on time and whether the claim of a ‘reasonable excuse’ may be accepted or not (see CISR81050).