CCPG11720 - Reasonable excuse: what is reasonable excuse
Note: This manual is currently under review following Brexit. In the meantime, you should check the other guidance available on GOV.UK from HMRC.
A person will not be liable to a penalty if they have a reasonable excuse for a contravention.
There is no statutory definition of reasonable excuse, it “is a matter to be considered in the light of all the circumstances of the particular case” (Rowland v HMRC  STC (SCD) 536 at paragraph 18). This was confirmed by the First Tier Tribunal, in Anthony Wood trading as Propave v HMRC (2011 UK FTT 136 TC 001010), in the judgement released on 23 February 2011.
HMRC consider reasonable excuse to be something that stops a person from meeting a tax obligation despite them having taken reasonable care to meet that obligation. It is necessary to consider what a reasonable person, who wanted to meet their obligation would have done in the same circumstances and decide if the action of the person met that standard as outlined by Judge Medd in The Clean Car Company (LON/90/138X)
“‘One must ask oneself: was what the taxpayer did a reasonable thing for a responsible trader conscious of and intending to comply with his obligations regarding tax, but having the experience and other relevant attributes of the taxpayer and placed in the situation that the taxpayer found himself at the relevant time, a reasonable thing to do? Put in another way which does not I think alter the sense of the question; was what the taxpayer did not an unreasonable thing for a trader of the sort I have envisaged, in the position that the taxpayer found himself, to do?”
So the test is to consider what a reasonable person, who wanted to comply with their tax obligations, would have done in the same circumstances and decide if the actions of the person met that standard. When considering this you must always look at the circumstances in which the failure or contravention occurred, as well as the particular circumstances and abilities of the individual.
An unexpected combination of events may together be a reasonable excuse.
If there is a reasonable excuse it must exist throughout the period of the contravention.
The law does specify two situations that are not reasonable excuses. These are