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HMRC internal manual

Construction Industry Scheme Reform Manual

Compliance: Overview & ‘Reasonable excuse’: What can be a ‘reasonable excuse’?

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” (Rowland v HMRC [2006] STC (SCD) 536 at paragraph 18). For example in Anthony Wood, trading as Propaye v HMRC (2011 UK FTT 136 TC 001010), the First Tier Tribunal applied this definition in their decision released on 23 February 2011.

A reasonable excuse is normally an unexpected or unusual event that could not be reasonably forseen or is beyond the person’s control and which prevents the person from complying with an obligation when they would otherwise have done. An unexpected combination of events may, together, be a reasonable excuse.

It is necessary to consider the actions of the person from the perspective of a prudent person, exercising reasonable foresight and due diligence, having proper regard for their responsibilities under the taxes acts.

If the person could reasonably have foreseen the event, whether or not it is within their control, we would expect the person to take steps to meet their obligations. It is a matter of judgment, if you consider the excuse to be reasonable you must accept it.

The important point to remember is that the customer must have taken action without unreasonable delay to rectify the position in relation to their outstanding obligations as soon as the circumstances surrounding the ‘reasonable excuse’ have ceased to be present (see CISR81110).

It is not possible to give a comprehensive list of what might be a reasonable excuse. Each depends upon the particular circumstances in which the failure occurred and the particular circumstances and abilities of the person who has failed. What is a reasonable excuse for one person’s circumstances may not be a reasonable excuse for another person in different circumstances.

If there is a reasonable excuse, it must exist throughout the period of the default.

CISR81070 gives some examples of what could be considered a reasonable excuse.

The law does, however, specify two situations that are not reasonable excuses. These are

* shortage of funds, see [CISR81080](
* reliance on another person, see [CISR81100](