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HMRC internal manual

Insurance Policyholder Taxation Manual

From
HM Revenue & Customs
Updated
, see all updates

What is reasonable excuse?

Generally, a ‘reasonable excuse’ is when some unforeseeable or unusual event beyond your control has prevented you from making your statement on time. A combination of unexpected and foreseeable events may when viewed together be a reasonable excuse.

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

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

It is not possible to give a comprehensive list of what might be a reasonable excuse. It will depend upon the particular circumstances in which the failure to make a statement occurred and the particular circumstances and abilities of the individual who has failed to make the statement. What is a reasonable excuse for one person’s circumstances may not be a reasonable excuse for another person, or the same person in different circumstances.

If there is a reasonable excuse it must exist throughout the affected period.

HMRC would normally consider the onset of a serious illness, disability or serious mental health condition at the same time the declaration was due that made the individual incapable of making that statement a reasonable excuse.

We will not accept an excuse where an individual has not made a reasonable effort to meet the deadline such as for example, forgetting about the deadline.

The following reasons are also unlikely to be accepted by HMRC as a reasonable excuse:

  • pressure of work
  • lack of information
  • HMRC/insurance company did not remind me
  • ignorance of the law.

Unreasonable delay

The following examples should assist in determining what is meant by unreasonable delay:

(a) No unreasonable delay

Kate was unable to make a statement on time due to the death of a family member and, from the information available; HMRC accepted that the bereavement was a reasonable excuse.

Kate made a statement two weeks after the funeral.

As Kate had a reasonable excuse for not making the declaration on time, HMRC judged that, based on the facts of this case, the delay in correcting it was reasonable. The reasonable excuse provision applies so that the policy is reinstated as a qualifying policy or restricted relief qualifying policy from the date that it was issued or if relevant the significant modification or assignment was made as appropriate.

(b) Unreasonable delay

Lisa was unable to make a statement on time due to the death of a family member and, from the information available; HMRC accepted that the bereavement was a reasonable excuse.

However, Lisa had still not made a statement for a few months after the bereavement and did not notify her policy provider (or HMRC) of any other changes to her circumstances.

Although Lisa had a reasonable excuse for not making a statement on time due to the death of a family member, based on the facts of this case, by waiting so long to correct that failure meant that she had failed to take reasonable care and so the delay became unreasonable. Lisa cannot take advantage of this provision, so the policy is treated as non-qualifying from the date of issue or if relevant the date of the significant modification or assignment as appropriate.