Beta This part of GOV.UK is being rebuilt – find out what this means

HMRC internal manual

Enquiry Manual

HM Revenue & Customs
, see all updates

Penalties: Culpability - Defences: Reasonable Excuse -Introduction


EM5151 explains that circumstances when a claim may be made under S118(2) because further time may have been allowed.

As well as ‘extra time’ EM5151 the subsection also provides that ‘… where a person had a reasonable excuse for not doing anything required to be done he shall be deemed not to have failed to do it unless the excuse ceased and, after the excuse ceased, he shall be deemed not to have failed to do it if he did it without unreasonable delay after the excuse had ceased.’

There is no statutory definition of reasonable excuse, which “is a matter to be considered in the light of all the circumstances of the particular case” (Rowland V HMRC [2006] STC (SCD) 536 at paragraph 18). This was confirmed by the First Tier Tribunal, in Anthony Wood trading as Propaye V HMRC (2011 UK FTT 136 TC 001010), in the judgement released on 23 February 2011.

A reasonable excuse is normally an unexpected or unusual event that is either unforeseeable or beyond the taxpayer’s control, and which prevents the taxpayer from complying with their obligations. A combination of unexpected and foreseeable events may, when viewed together, be a reasonable excuse.

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

If the taxpayer could reasonably have foreseen the event, whether or not it is within their control, we expect the taxpayer to take steps to meet their obligations.

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

In every case of substance you should ascertain, as far as possible, the taxpayer’s own reasons for the failure. This is best done in the course of an interview. The taxpayer, especially if unrepresented, must be made aware of the provisions of TMA70/S118 (2) and their potential effect on the settlement. You must, of course, show that you are prepared to listen to the taxpayer and consider carefully what you are told.

You will have to test the taxpayer’s explanation against the information you already hold and you will be able to take into account events subsequent to the actual offence.

In cases of failure the taxpayer’s agent may well be responsible for the delay. Even if only partially to blame the agent will realise that he or she is vulnerable to a negligence claim by their client. The effect of this is that the agent is likely to contest HMRC’s allegation more vigorously, and with less professional detachment, than if it was only client’s money at stake. You should not allow the discussion to get heated or to be conducted on a personal or unprofessional level.

For failures by companies to deliver returns under CT Self Assessment provisions guidance on claims for reasonable excuse is to be found at CTM94140.