Apologies for HMRC penalties
When it comes to self-assessment tax returns, being punctual is crucial. Failing to submit your tax return by January 31 following the end of the relevant tax year or failing to pay your taxes due on time may result in automatic penalties from HMRC. Additionally, failure to notify HMRC of the taxation will also result in similar penalties. However, the only way to avoid these penalties is to prove that you have a reasonable excuse. But what exactly constitutes a “reasonable excuse”?
What is a reasonable excuse?
There is no strict legal definition of a reasonable excuse. One of HMRC’s internal manuals defines a reasonable excuse as:
“Something that prevents a person from fulfilling a tax obligation even though he or she has taken reasonable steps to fulfill that obligation.” »
Essentially, this means that despite taking necessary measures and precautions, an individual has been unable to meet their tax obligations due to unforeseen or uncontrollable circumstances. However, each case is unique and what may be considered a reasonable excuse in one situation may not hold up in another. HMRC looks at this on a case by case basis.
Apologies rejected by HMRC
Every year HMRC publishes some of the most bizarre excuses it receives from taxpayers. Here are some of the funnier, but rejected, submissions:
• “I was just too busy: my first servant left, my second servant stole from me, and my third servant took a while to learn. »
• “My hamster ate my message. »
• “After seeing a volcanic eruption on the news, I couldn’t concentrate on anything else. »
• “I’m too short to reach the mailbox.” »
• “My boiler was broken and my fingers were too cold to type.” »
• “My ex-wife left the tax return upstairs and I can’t go get it because I’m dizzy. »
Although entertaining, this apology does not meet HMRC’s criteria for what constitutes a reasonable excuse.
Examples of valid reasonable excuses
For clarity, HMRC includes a range of scenarios in its manuals, including issues relating to physical or mental illness, dependency on a third party, bereavement, postal delays, technical problems and loss of records due to fire or flood (failing to keep adequate records). is not a reasonable excuse).
Additionally, HMRC provides specific examples in its manuals and online guidance:
• An unexpected hospital stay that prevented the person from managing their tax affairs.
• The person’s computer or software crashes just before or while submitting the online return.
• A fire, flood or theft prevented you from completing a tax return.
• Delay caused by HMRC itself.
• Active duty overseas for members of the Armed Forces.
These examples demonstrate that, in essence, the taxpayer must demonstrate that he was prevented from fulfilling his obligations due to circumstances beyond his control and that he acted as a reasonable person would have done in the same situation.
Case: Farmer against the R&C commissioners
A case that highlights the nuances of what can be considered a reasonable excuse is this: Farmer versus R&C commissioners. The taxpayer in this case submitted her paper tax return for 2021-22 on time, but sent it to an outdated HMRC address. She received an initial penalty of £100 as well as daily and six-monthly penalties. Even though she did not know the address was incorrect (which was a reasonable excuse for the initial sanction), the Trial Court found that she should have taken corrective action after receiving notice of the first sanction . Therefore, although the original £100 fine was overturned, the daily and six-monthly fines were kept because she did not act quickly enough to alleviate her situation.
This case demonstrates that even when a reasonable excuse exists, taxpayers must remedy the situation quickly to avoid accruing further penalties.
Special circumstances
HMRC may also consider “special circumstances” which do not constitute reasonable excuses but warrant some leniency. This includes factors that, even if not directly causing the failure, may warrant a reduction or cancellation of penalties. Taxpayers are encouraged to contact HMRC as soon as problems arise and to keep a record of any difficulties encountered.
In summary
For HMRC to accept a reasonable excuse, the taxpayer must demonstrate that they took all possible steps to meet their tax obligations, but were prevented from doing so by events beyond their control. Although some excuses are immediately dismissed, legitimate reasons related to health, bereavement, technical failures or incorrect information may be considered valid. However, it is essential that taxpayers act quickly and maintain complete documentation to support their claims in the event of penalties.
Next steps
If you need help completing your tax return, tax filing advice, or any other tax questions, please contact us.
