Reasonable excuse: how will HMRC be satisfied a reasonable excuse exists
The Customer Compliance Manager (CCM), Mid-sized Business Customer Engagement Team (CET) or Caseworker will have to establish how a failure occurred in order for HMRC to decide whether the circumstances surrounding that failure provide the person with a reasonable excuse for the lateness of the notification or certificate, or the failure of the main duty.
There are many different circumstances that may represent a reasonable excuse for such a failure. Each case must be considered on its own merits and the CCM, CET or Caseworker must take into account a person’s abilities, circumstances and experience.
The onus is on the person to satisfy HMRC that they have a reasonable excuse. They must tell the CCM, CET or Caseworker the reason and the CCM, CET or Caseworker must listen carefully to what they are told. The CCM, CET or Caserworker should consider the explanation carefully taking into account all the circumstances and available information.
The circumstances of each individual case will determine whether the CCM, CET or Caseworker needs supporting evidence and if so what that will be.
The CCM, CET or Caseworker must ensure that any request for evidence they make is reasonable and proportionate. If they need to ask for information they must apply this guidance in conjunction with the HRA procedures at CH21360.
Whether there is a reasonable excuse is a matter of judgement. Whether the CCM, CET or Caseworker considers the excuse reasonable or not they must refer the matter to the Penalties Consistency Panel, see SAOG19600.
If it is then considered that the person’s arguments do not represent a reasonable excuse, the Panel will tell the CCM, CET or Caseworker to make a penalty assessment in the amounts provided for, although in some cases this will still need the approval of a Director in Large Business or an Assistant Director in Mid-sized Business, see SAOG19800.
The CCM, CET or Caseworker must send a penalty assessment letter, setting out the penalty and including the facts, the reason for decision, appeal and review rights. See SAOG21600 for what a penalty assessment must include and ARTG2190 for what should be included in the decision letter and ARTG15000 for a standard form of wording.