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HMRC internal manual

VAT Civil Penalties

HM Revenue & Customs
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Default Surcharge: Discretion, reasonable excuse and mitigation: Illness or loss of key personnel

You should take the following factors into consideration when considering appeals on thesegrounds

  • the precise date and nature of the illness
  • is/was the illness serious enough to prevent the return and/or payment being submitted on time
  • could anyone else have provided cover in the absence, and
  • what steps have been taken to make alternative arrangements

In the case of Michael Bowen [1987] VATTR 255, Mr Bowen appealed against a number ofdefaults citing the illness of his secretary as a reasonable excuse. The Tribunal acceptedthat he had a reasonable excuse for one default only. The Rt Hon Lord Grantchester stated:

“In the light of the history of the illness of Mr Bowen’sformer secretary from Oct/Nov 1986 onwards, I proceed to consider whether such an illnessamounts to reasonable excuse for the late dispatch of his return for the period ending 31October 1986, or the late dispatch of his return for the periods ending 1 January 1987 or30 April 1987.

In relation thereto, in all the circumstances, I have come to theconclusion that Mr Bowen has satisfied me that he has a reasonable excuse for the secondor third default. By the end of January Mr Bowen, in my view, should have taken steps toengage a substitute for his former secretary to complete his VAT return and dispatch itwithin the following month”.