DST65320 - Reasonable Excuse

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.

Whether a Responsible Member has a reasonable excuse will depend on the particular circumstances in which the failure occurred. What is a reasonable excuse for one Responsible Member may not be a reasonable excuse for another Responsible Member.

The Responsible Member must remedy the failure as soon as can reasonably be expected after the excuse has ended.

Honesty of purpose is a preliminary condition that a Responsible Member always needs to fulfil. HMRC will also consider the circumstances of the person making the claim.

HMRC will establish all the relevant facts, including:

• the circumstances which led to the failure to submit the return in time,
• the extent to which appropriate preliminary work had been put in hand before the excuse prevented further progress,
• whether the necessary steps were taken to remedy the failure after the excuse had ended.

It will not be a reasonable excuse to claim that:

• failure is due to a dilatory agent,
• information relevant to the return is not available at the filing date,
• the affairs of the company are too complicated to enable the return to be completed in time,
• the responsible director is too busy running the company’s business,
• there is no intention of avoiding tax, or of deferring payment of tax,
• the company is not liable to tax for the period for which the return is required, or has overpaid tax,
• there is insufficiency of funds, or
• relying on any other person to do anything, unless the Responsible Member took reasonable care to avoid the failure

Tax Administration Litigation & Advice (TALA) should be contacted if doubts remain about the validity of the claims once HMRC have ascertained all the facts.