Reasonable excuse

By Tolley

The following Personal Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Reasonable excuse
  • Late notification of chargeability to tax
  • Late filing of the Tax Return
  • Late payment of tax

If a penalty has been correctly charged by HMRC, the taxpayer can only appeal if he believes he has a 'reasonable excuse' for failing to comply with the legislation.

The term 'reasonable excuse' is not defined in the legislation and therefore the meaning is continually being reassessed by the courts “in light of all the circumstances of the particular case”.

Rowland v HMRC [2006] STC (SCD) 536 at para 19 (subscription sensitive)

HMRC considers a reasonable excuse to be “an unexpected or unusual event that is either unforeseeable or beyond the person’s control, and which prevents the person from complying...when they would otherwise have done.” In order to assess whether the excuse is reasonable, HMRC assesses whether the taxpayer exercised the “reasonable foresight and due diligence” that would be expected of a prudent person.

CH71540, CH61540, CH155600

If the person could reasonably have foreseen the event, whether or not it is within their control, HMRC expects the person to take steps to meet his obligations.

CH71540, CH61540, CH155600

In terms of proving a reasonable excuse, the European Court of Human Rights judgment in Jussila v Finland is interesting as it turns the burden of proof on its head. Normally, the burden of proof in tax cases rests with the taxpayer. However, the Jussila case makes it clear that penalties are 'criminal charges', meaning that in penalty appeal cases the burden of proof rests with HMRC. However, as decided in Khawaja, the civil standard of proof applies, not the criminal standard. This means that HMRC must prove 'on the balance of probabilities' that a penalty is due. The impact of the Jussila case on the new penalties regime is discussed in ‘New Penalties’ by Hui Ling McCarthy in Tax Journal, Issue 977, 22 (20 April 2009) (subscription sensitive).

Jussila v Finland [2009] STC 29;

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