Reasonable excuse - failure to notify

By Tolley in association with Philip Rutherford

The following Corporation Tax guidance note by Tolley in association with Philip Rutherford provides comprehensive and up to date tax information covering:

  • Reasonable excuse - failure to notify
  • Introduction
  • HMRC’s view
  • What is not a reasonable excuse?
  • What might be a reasonable excuse?
  • What is the attitude of HMRC to late notification where there is no reasonable excuse?
  • Case law


If a penalty for failure to notify 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. Reasonable excuse is provided for the late notification for all taxes by FA 2008, Sch 41, para 20.

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

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

Historically HMRC took a very hard line on what constituted a reasonable excuse for late notification. HMRC’s guidance used to refer to exceptional circumstances and, while this has been removed from the guidance, it continues to be very restrictive on the circumstances in which a taxpayer can claim reasonable excuse. Recent case law has, in many cases, been very different from the expressed views of HMRC.

This guidance note outlines HMRC’s view of what may or may not constitute reasonable excuse and then explores the importance of case law and the impact of pertinent judgements. What is clear is that if a taxpayer believes he has grounds for claiming reasonable excuse he will have to put forward a very well structured argument and be prepared to fight the case with HMRC.

HMRC’s view

HMRC should review each claim for a reasonable excuse on a taxpayer-by-taxpayer basis. HMRC expects that a taxpayer who has a reasonable excuse will rectify the failure to notify within a reasonable time of the reasonable excuse ending. Again, what is a reasonable period of time will be examined on a case-by-case basis.


HMRC’s guidance defines a reasonable excuse as “an unexpected or unusual event that is either unforeseeable or

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