A4.568 Reasonable excuse—introduction
For the latest New Development, see ND.1903.
No penalty is payable if the taxpayer satisfies HMRC, or the First-tier Tribunal on appeal, that they have a reasonable excuse for the failure1. See A4.541 (penalties for failure to notify liability), A4.552 (late filing penalties) and A4.563 (late payment penalties). Under these circumstances, the taxpayer will have a complete defence to the proposed penalty and none of the other statutory questions (potential lost revenue, disclosure, special reduction, suspension etc) will arise.
This article discusses some general principles of what may and may not be considered a reasonable excuse. Although there is no set list in statute of what does constitute a reasonable excuse, subsequent articles look in more detail at particular themes or sets of circumstances which might give rise to a reasonable excuse, informed by case law.
Note that reasonable excuse should not be confused with taking 'reasonable care' (see A4.532A). The exception to this is when the taxpayer has placed reliance on a third party, in which respect taxpayers may be considered to have a reasonable excuse if they took reasonable care in relation to their own acts or omissions (see 'What is not a reasonable excuse?' below).
Inaccuracy penalties (see A4.530)) may be appealed on the grounds they taxpayer has taken reasonable care (as above, see A4.532A), and penalties may be reduced because of special circumstances (see A4.567D).
It is important to note that there is no ability to appeal a penalty for inaccuracy on reasonable excuse grounds,