CH26440 - Information & Inspection Powers: Penalties: when is a penalty chargeable: reasonable excuse: reliance on another person

A person may need to rely on someone else to be able to comply with an information notice or an inspection. The notice may ask for documents that are in the person’s power but not their possession. The person may have to get them from, for example a bank or solicitor. The notice may seek information that needs to be assembled so the person may choose to use an agent or adviser to help respond to the notice.

If a third party does not produce the documents or provide the information, the person will not be able to comply with the notice. However, the person who received the notice is responsible for complying with it, even though a third party is involved in gathering the documents or information. Any failure by the third party will be a reasonable excuse only if the person took reasonable care to try to avoid the failure or obstruction.

We expect the person to take reasonable care to ensure that they contact the third party promptly, that deadlines are set for the work required and to make regular checks on progress, reminding where appropriate. We expect the person

  • to be able to tell us what action they took to get the documents or information, and
  • normally, but not always, to know the reason for any delay.

If the person receiving the notice does all this and still fails to comply with the notice, or inspection, because the third party failed, they may have a reasonable excuse. However, the person must remedy the failure without unreasonable delay after the excuse has ended, see CH26460.

Remember that there is no statutory definition of ‘reasonable’ or ‘unreasonable’. Each case must be judged on its own merits in view of the person’s abilities and circumstances. See CH26340 and CH26360.

For example

Mary is to receive a Tribunal-approved inspection visit that includes a Tribunal approved taxpayer notice to provide access to her business records including bank account statements. The bank statements have been mis-placed. Mary arranges a search for the statements and when they cannot be found she asks her bank for duplicate statements. The bank agrees to send them but they have not arrived by the date of the inspection. Mary recognises that the inspection cannot be completed without the statements but does not wish to have the officer visit twice. She therefore postpones the inspection visit. We can accept that Mary has a reasonable excuse for deliberately obstructing the inspection, that is, not allowing a Tribunal approved inspection to take place at the appointed date and time.

FA08/SCH36/PARA45 (2)(b)

CEMA79/S118G