Winning reasonable excuse cases

Produced by Tolley

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

  • Winning reasonable excuse cases
  • The statutory provisions
  • Appealing to HMRC and / or the Tribunal
  • Step 1 ― establish the starting point
  • Step 2 ― what was the failure?
  • Step 3 ― what were the reasons?
  • Step 4 ― what was the situation?
  • Step 5 ― what are the characteristics of the taxpayer?
  • Step 6 ― consider HMRC’s evidence
  • Step 7 ― consider the exceptions
  • More...

Winning reasonable excuse cases

Most penalties can be set aside if there is a ‘reasonable excuse’ for the action taken, or not taken, by the taxpayer and / or the agent. This guidance note sets out a suggested approach to help you and your client win a penalty appeal on the basis of reasonable excuse.

You may also find it helpful to read through other cases involving the same type of excuse to give you a flavour of the Tribunal approach. But remember that all tax decisions depend on the facts of that particular case, and that this is especially true of reasonable excuse cases.

This guidance note is only a guide, it does not cover all circumstances. Specialist advice may be required, for instance from a barrister specialising in tax.

The statutory provisions

HMRC’s penalty notice will state the legislation under which the penalty has been charged.

Penalties under the following provisions are set aside if there is a reasonable excuse:

  1. FA 2009, Sch 55, para 23 (late filing penalties)

  2. FA 2009, Sch 56, para 16 (late payment penalties)

  3. FA 2008, Sch 41, para 20 (failure to notify penalties and penalties for certain VAT and Excise wrongdoing)

  4. FA 1998, Sch 18, Part II, para 19 as read with TMA 1970, s 118(2) (corporation tax late filing penalties)

  5. IHTA 1984, ss 245(7), 245A(5) (inheritance tax late filing penalties)

  6. VATA 1994, s 59(7)(b) (default surcharge)

  7. FA 2008, Sch 36, Part 7, para 45 (failure to comply with information notice penalties)

  8. FA 2003, s 97 (stamp duty land tax late filing and late payment penalties)

  9. RSTPA 2014, s 178 (land and buildings transaction tax late filing penalties and late payment penalties)

  10. Tax Collection and Management (Wales) Act 2016, s 126 (land transaction tax late filing and late payment penalties)

These penalties are discussed in detail in the Penalties for failure to notify, Self assessment late filing penalties, Late payment penalties under self assessment, Default surcharge, HMRC’s power to require information and documents and

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