A4.568C Reasonable excuse—reliance on professional agent
This section is concerned with the common practice whereby the taxpayer entrusts some or all of his tax affairs to an accountant, solicitor or other professional tax adviser. Such professional advisers are often described generically as agents, since they have authority to deal with HMRC on the taxpayer's behalf. Reliance upon third parties in other contexts is considered in A4.568D.
Note that this article does not discuss reliance on an agent in the context of whether the taxpayer has taken reasonable care in relation to an inaccuracy penalty. That commentary can be found at A4.532A.
Statutory provisions on reliance on a third party
All of the main penalty provisions make express provision in relation to reliance upon an agent. In relation to failure to notify, failure to file a document and failure to pay on time, it is provided that:
'where [the taxpayer] relies on any other person to do anything, that is not a reasonable excuse unless [the taxpayer] took reasonable care to avoid the relevant act or failure.1'
The statutory language focuses on the actions of the taxpayer rather than those of his agent. As long as the taxpayer himself acted reasonably in relying on the agent, they are not penalised for the agent's shortcomings, however serious they might have been. By the same token, the taxpayer cannot usually rely on an excuse relating to the agent. If the taxpayer learns, for instance, that their accountant is ill and cannot complete their returns on time, they
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