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HMRC internal manual

Construction Industry Scheme Reform Manual

Compliance: Overview & ‘Reasonable excuse’: How will HMRC be satisfied that a ‘reasonable excuse’ exists?

In most cases it is unlikely that illness, absence or domestic problems would persist at such a level throughout the period for making payments and delivering tax returns or contractor/employer returns for a customer. Even if the difficulties were at their worst at the crucial time towards the end of the due dates in respect of these obligations then the customer should still be able comply with their statutory duties within a reasonable time shortly after this.


For an illness to be treated as a ‘reasonable excuse’ it must generally be so serious that it prevented the customer from dealing with their tax affairs before the deadline and from that date to the time the payment(s) or completed return(s) were actually sent in. Examples of such illnesses include

  • coma
  • major heart attack
  • stroke
  • any serious or life-threatening illness.

If an illness involves a lengthy stay in hospital or convalescence the customer is expected to have made arrangements for completing and sending in any payments due, completing Self-Assessment (SA) or Company (COTAX) returns due and completing contractor monthly returns (CIS300) or PAYE Employer returns due. But there may be reasons why this is not possible so you will therefore need to ascertain all the facts surrounding the ‘reasonable excuse’ claim.

You should also consider the particular circumstances of the customer. A sole trader completing CIS monthly returns will have more difficulty in meeting their obligations to HMRC where they have been ill than a large corporation where a single staff member who normally completes the monthly returns is absent due to illness.

If the excuse is the serious illness of a close relative or partner, you may accept it as a reasonable excuse only if

  • the situation took up a great deal of the customer’s time and attention during the period from the various deadlines to the date the payment or completed return(s) was sent in, and
  • steps had already been taken to have the payment or return ready on time.

Onset of a disability or mental health condition

  • We would also treat as a reasonable excuse the onset of disability or a serious mental health condition, where they make the person unable to deal with their tax affairs.
  • However, we would expect someone who knows they will find it difficult to meet a requirement, because of an existing condition, to make every reasonable effort to anticipate this and make alternative arrangements.

You should test excuses involving illness, absence or family problems but you should ask questions with sensitivity. Where possible, you should consider talking with the customer directly. If you are still unsure whether the excuse is reasonable when you have all the facts, you should seek advice firstly from your Technical Support HO.

The CIS legislation does not qualify the term ‘reasonable excuse’ when it is applied to gross payment status. However, as set out above, some of the new penalty provisions specifically prevent a person claiming that an insufficiency of funds (cash flow) is a ‘reasonable excuse’ except in specific circumstances (see CISR81080). They also exclude reliance on an agent (see CISR81100).

The Compliance Handbook gives further guidance on HMRC’s general approach to ‘reasonable excuse’. You may find the guidance at CH71540, CH71560 and CH71600 helpful.

If you think that the different legislative provisions produce a discrepancy between the way ‘reasonable excuse’ will apply to different circumstances, please seek specialist technical advice by making a submission to the CIS Technical Team (CISR97090) following the guidance on the CIS Intranet, using the ‘submissions template’.

If you do not consider that the person’s arguments represent a reasonable excuse, then you must tell the person why you consider that the explanation they have given you for the failure does not, in your view, amount to a ‘reasonable excuse’ when you give notice to the appellant 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. The guidance at ARTG15000 also contains standard wording for decision letters.