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HMRC internal manual

VAT Default Surcharge Officer's Guide

HM Revenue & Customs
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Reasonable excuse

There is no statutory definition of reasonable excuse. However, section 71 of the VAT Act 1994 specifically excludes the following from being a reasonable excuse:

  • lack of funds to pay any VAT due, or
  • reliance on any other person to perform a task, where there has been a delay or inaccuracy on that person’s part.

Where a reasonable excuse is established before a default is recorded, form VAT 719 should be input to the VAT mainframe through VALID to inhibit automatic surcharge processing for the relevant period(s).

Generally the factors affecting reasonable excuse apply across all late payment penalties/surcharges. The Compliance Handbook has further guidance on reasonable excuse in the context of late payment of tax, see CH155500.

Note: Officers reviewing a default surcharge issued to a POA taxpayer should contact the POA team when an appeal is received (POA taxpayers are identified by review code 443 on VISION). The POA team manually record surcharge defaults and will often have information relevant to the case.