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HMRC internal manual

Customs Civil Penalties Guidance

Reasonable excuse: shortage of funds

A lack of money is not itself a reasonable excuse for a contravention.

However, a person can have a reasonable excuse where insufficiency of funds has led to a contravention despite the person exercising reasonable foresight and due diligence, and having given proper regard to the fact that duty would become due on a particular date

Most traders experience cash-flow problems as part of their normal cycle of business. They manage those difficulties as part of their day-to-day operations. So a normal, expected shortage of funds is something we expect a person to be able to manage, perhaps by arranging short-term finance.

There may, however, be unusual or uncommon events that are beyond the person’s control and outside this normal cycle that create a severe cash shortage that cannot be managed. If this shortage of funds is the cause of the contravention the person may have a reasonable excuse.

S27(2) FA03