CH160700 - Reasonable excuse: reliance on another person

The law says that where a person relies on any other person to do anything, that is not a reasonable excuse unless the person took reasonable care to avoid the relevant failure.

Where a person has asked somebody else to do something on their behalf, they are responsible for ensuring that the other person carries out the task. They cannot claim they had a reasonable excuse merely because they delegated the task to another person and that person failed to complete it.

Reliance on another person can only constitute a reasonable excuse if the person took reasonable care to meet their obligation.

We expect the person to take reasonable care to explain to the other person what they require them to do, to set deadlines for the work and to make regular checks on progress, reminding them where appropriate. We expect the person:

• to be able to tell us what action they took to try to ensure that the obligation was met, and
• normally, but not always, to know the reason why the failure occurred.

If the person does this and still fails to meet their obligation because the other person failed, they may have a reasonable excuse. However, the person must remedy the failure without unreasonable delay after the excuse has ended.

In the case of Lithgow [2012] UKFTT 620 (TC) the Tribunal, on finding that the customer did not have a reasonable excuse for the late filing of his return, distinguished between reliance on a third person who acts an agent and reliance on a third person for professional advice. Judge Jones concluded at paragraph 15 of his succinct decision

“In my judgement, where an accountant acts as an administrator or functionary, he is acting as the taxpayer’s agent and his default (whether negligent or not) will usually provide a taxpayer with little opportunity to claim that he is not in default of a particular obligation. However, when a professional acts in a truly professional advisory capacity, the situation is otherwise and reliance upon properly provided professional advice, absent reason to believe that it is wrong, unreliable or hedged about with substantial caveats, will usually lead to the conclusion that a taxpayer has not been negligent if he has taken and acted upon that advice.”

The agent in that case had not submitted the return on time (it was filed over 10 months late) due to the ill health of his father. The Tribunal explained that the responsibility for filing on time rested with the customer. On realising that his agent would not be able to file the return by the statutory deadline, the customer should have made alternative arrangements.

There will be circumstances in which it is unreasonable to expect a person to replace their agent if they are unable to complete a required task immediately. For example, the 31 January 2021 SA filing deadline was one example where many agents told HMRC they would struggle to have SA returns ready for their clients to submit due to COVID19 related work pressures. HMRC recognised it would have been impractical for many persons to find another agent to help them prepare their returns before 31 January or for agent to take on a new client at short notice.

Sometimes an agent may become ill or pass away. If the agent is a sole practitioner or in a small firm then, despite the person trying to chase for their return submission, the situation may not be rectified in time. If the person realises this several months before the deadline, then they should be able to instruct a replacement agent and get their return filed in time. If it is within a couple of months or so of the deadline then this may not be possible despite the taxpayer’s best efforts.

Example

Mr. X is blind. He is unable to use the GOV.UK website and so decides to submit his SA return on paper. He asks an agent to compile and submit the return for him, but, before the filing date, the agent is taken ill. He returns the paperwork to Mr. X shortly before the filing date, but Mr. X is unable to complete the return himself and has no opportunity to make alternative arrangements before the filing date. He promptly arranges for another person to complete and submit his return soon after the filing date.

The reasonable excuse here is not simply that Mr. X is blind. We would not accept that every blind person who fails to submit their return by the due date automatically has a reasonable excuse. In this example, the customer had taken steps to comply with his obligation, taking account of his disability, but circumstances outside his control left it too late for him to make alternative arrangements and his disability prevented him from doing it himself.

Other examples where reliance on another person may give rise to a reasonable excuse include:

• agent illness or bereavement of the agent or of the agent`s close family member or partner
• person had taken advice from an advisor and/or counsel and they appeared suitably qualified to give that advice and the person had provided all the relevant information
• person engaged a new adviser but there was a delay in obtaining paperwork/information from the previous adviser.