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HMRC internal manual

Excise Civil Penalties Manual

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HM Revenue & Customs
Updated
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Reviews and appeals: Excuses offered

|   | Excuse | Consider | || | 1 | Clerical / innocent error | This is a frequently argued point, but it does not constitute a reasonable excuse on its own. It is the reason for making the error that needs to be addressed when deciding if an excuse exists.  | | 2 | Compassionate grounds e.g. illness, stress, death of family member etc. | * Was the event causing the distress unforeseen? * If it was foreseeable or had continued for some time, what contingency plans had been made? * How serious / debilitating was the problem? Was this an uncharacteristic error on the part of someone who had a long history of reliability? * If it is claimed that the error was caused by the death of someone close to the person compiling the duty return, how closely involved were they? Try to establish the relationship between the two, and then make a balanced judgement. | | 3 | Complex liability | * Is the size of the taxpayers business relevant? * Is the subject covered satisfactorily in HMRC guidance available to the public * Is the subject of the assessment part of the taxpayer’s main business activity * What steps had been taken to confirm the liability? * Had this been checked with HMRC, accountants or tax advisors? * Had the error continued for some time and not been corrected on previous visits? * Should the taxpayer have been familiar with the transaction? * How easy was it for the officer to determine the correct liability? | | 4 | Computer error | * Was the package bought in or developed in house? * What checks took place between transcribing figures from the computer outputs to the duty return? * Did the error occur in a newly installed system, or an established system? * If it was a new system, had the installation been well researched and supervised, or was it poorly thought out and hastily implemented? * Were parallel manual records being kept to test the accuracy of the new system? * Was this a one-off error or were there recurring problems? * If an established, had it been error free in the past? * What system access security was there in place (e.g. passwords) and who had access to the applications in which the error occurred? * Was the problem a hardware / software error or simply an operator error? * How well were the operators trained and how closely were they supervised? * How secure was the system from outside influences such as power cuts, and were any procedures in place to test the system for data corruptions after such an event? * Was there a back-up system? * Had the bought in software package been amended by the trader? * Had the system been examined by the CAO / CAU and what recommendations were made? | | 5 | Lack of funds | The claim of lack of funds is specifically excluded from being a reasonable excuse under Finance Act 1994 Section 10 (3). This is mirrored in VAT law in Section 71 of the VATA 1994. | | 6 | Ignorance of the law | * Has the taxpayer shown ignorance or misunderstanding of primary and / or secondary legislation? This may, in certain circumstances, be considered to constitute a reasonable excuse. * Is the transaction outside the ‘norm’ for any given taxpayer? Where any transaction has taken place which is outside the ‘norm’ for a taxpayer and where this transaction is in an area which can be considered to add complications to a taxpayers normal accounting procedure, this may in some cases provide a trader with a reasonable excuse. * Does the taxpayer run a small business or is it a large very structured business? * Did the trader seek advice? | | 7 | Reliance on a third party | * The law states that ‘where reliance is placed by any person on another to perform any task, then neither the fact of that reliance nor the fact any conduct to which section ECP8000 (Reviews and appeals) applies was attributable to the conduct of that other person shall be a reasonable excuse’ (Finance Act 1994 Section 10 para (3)(b))
The definition of an ‘other person’ is any person outside the direct employment of the registered trader.
The words ‘perform any task’ includes the giving of advice by a professional adviser as well as the delegation of book-keeping / accounting duties. * Has the trader claimed reliance on a third party for all or part of his argument? * Can the provisions of Section 10 (3)(b) be overridden by other reasonable excuse arguments such as illness of the other person which effects their ability to perform the task accurately? | | 8 | Misdirection | (This content has been withheld because of exemptions in the Freedom of Information Act 2000) You should be aware that misdirection can be either positive or by omission.(This content has been withheld because of exemptions in the Freedom of Information Act 2000) (This content has been withheld because of exemptions in the Freedom of Information Act 2000) (This content has been withheld because of exemptions in the Freedom of Information Act 2000) | | (This content has been withheld because of exemptions in the Freedom of Information Act 2000) | (This content has been withheld because of exemptions in the Freedom of Information Act 2000) | (This content has been withheld because of exemptions in the Freedom of Information Act 2000) (This content has been withheld because of exemptions in the Freedom of Information Act 2000) (This content has been withheld because of exemptions in the Freedom of Information Act 2000) (This content has been withheld because of exemptions in the Freedom of Information Act 2000) |