{"id":4497,"date":"2022-01-12T15:40:47","date_gmt":"2022-01-12T15:40:47","guid":{"rendered":"https:\/\/www.bainesjewitt.co.uk\/blog\/?p=4497"},"modified":"2022-01-12T15:40:49","modified_gmt":"2022-01-12T15:40:49","slug":"hmrcs-guidance-on-reasonable-excuses-for-late-tax-payments-updated","status":"publish","type":"post","link":"https:\/\/www.bainesjewitt.co.uk\/blog\/hmrcs-guidance-on-reasonable-excuses-for-late-tax-payments-updated\/","title":{"rendered":"HMRC\u2019s guidance on reasonable excuses for late tax payments updated"},"content":{"rendered":"<p>It should perhaps be no surprise given the circumstances of the pandemic that individuals and businesses might have incurred penalties for late tax payments.<\/p>\n<p><!--more--><\/p>\n<p>But the penalties charged by HM Revenue &amp; Customs can be mitigated if the taxman accepts what is a \u2018reasonable excuse\u2019 for failing to meet a payment deadline.<\/p>\n<p>HMRC guidelines have now been updated, but there is no statutory definition of \u2018reasonable excuse\u2019 or \u2018unreasonable delay\u2019.<\/p>\n<p>Each case must be considered on the facts, and in view of the person\u2019s abilities and circumstances, which could include problems caused by the pandemic.<\/p>\n<p>What might amount to a reasonable excuse for one taxpayer may not for another, but in certain circumstances a penalty could be incurred for:<\/p>\n<ul>\n<li>Failure to give notice of chargeability to tax<\/li>\n<li>Failure to on time<\/li>\n<li>Failure to pay on time or to meet certain other time bound obligations<\/li>\n<\/ul>\n<p>A person will not be liable to a penalty for a failure if they have:<\/p>\n<ul>\n<li>A reasonable excuse, and<\/li>\n<li>Put the failure right without unreasonable delay after the excuse had ended.<\/li>\n<\/ul>\n<p><a href=\"https:\/\/www.gov.uk\/hmrc-internal-manuals\/compliance-handbook\/ch160000\">HMRC\u2019s reasonable excuse guidance<\/a>\u00a0(CH160100-CH160950) which was recently updated, now states that the \u201claw does not require that a reasonable excuse is based on an unforeseeable or inescapable event\u201d.<\/p>\n<p>Instead, HMRC considers a reasonable excuse \u201cto be something that stops a person from meeting a tax obligation despite them having taken reasonable care to meet that obligation.\u201d<\/p>\n<p>A reasonable excuse does not have to be a single event or issue. In certain instances, a combination of factors can amount to a reasonable excuse when considered together.<\/p>\n<p>There are sections of HMRC\u2019s Compliance Handbook that discuss reasonable excuses in particular situations, including:<\/p>\n<ul>\n<li>Mental health<\/li>\n<li>Physical illness<\/li>\n<li>Ignorance of the law<\/li>\n<li>An unexpected stay in hospital that prevented them from dealing with their tax affairs<\/li>\n<li>Computer or software failed just before or while they were preparing their online return<\/li>\n<li>A fire, flood or theft prevented the person from completing their tax return<\/li>\n<li>Delay caused by HMRC<\/li>\n<li>Members of Armed Forces on active service overseas.<\/li>\n<\/ul>\n<p><strong>Determining if there is a reasonable excuse<\/strong><\/p>\n<p>To successfully challenge a penalty on the grounds of reasonable excuse, generally the taxpayer must demonstrate that they had a reasonable excuse and they put their failure right without unreasonable delay following the end of the reasonable excuse.<\/p>\n<p><strong>What is not a reasonable excuse<\/strong><\/p>\n<p>The updated HMRC guidance provides some examples that do not usually amount to a reasonable excuse on their own, including pressures at work, a lack of information, or not being reminded by HMRC about a tax obligation.<\/p>\n<p>Additionally, two situations are given in statute that do not amount to reasonable excuse:<\/p>\n<ul>\n<li>An insufficiency of funds<\/li>\n<li>Reliance on a third person.<\/li>\n<\/ul>\n<p>There are exceptions to these two exclusions. For example, an insufficiency of funds may be a reasonable excuse where it is a result of events outside the person\u2019s control.<\/p>\n<p>Reliance on third party expert, such as an accountant may, in certain circumstances, may amount to a reasonable excuse.<\/p>\n<p><strong>When reasonable excuse fails<\/strong><\/p>\n<p>Sometimes, HMRC may not accept that a taxpayer has a reasonable excuse. Where that does happen, the taxpayer may still be able to request a statutory review and may also be able to appeal against the penalty at tribunal.<\/p>\n<p>Depending on the circumstances, a penalty reduction on the grounds of special circumstances may also have merit.<\/p>\n<p><strong>For help and advice on related matters please contact our expert team.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>It should perhaps be no surprise given the circumstances of the pandemic that individuals and businesses might have incurred penalties for late tax payments.<\/p>\n","protected":false},"author":2,"featured_media":4499,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[24,31,27],"tags":[],"_links":{"self":[{"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/posts\/4497"}],"collection":[{"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/comments?post=4497"}],"version-history":[{"count":1,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/posts\/4497\/revisions"}],"predecessor-version":[{"id":4498,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/posts\/4497\/revisions\/4498"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/media\/4499"}],"wp:attachment":[{"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/media?parent=4497"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/categories?post=4497"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/tags?post=4497"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}