IPTM2091 - What is reasonable excuse?
HMRC considers reasonable excuse to be something that temporarily stops an individual from meeting a tax obligation which has fallen due but which an individual seeks to remedy without unreasonable delay after that excuse has ceased.
To consider whether a reasonable excuse exists, it is necessary to establish what facts are asserted to give rise to the reasonable excuse (for example, the beliefs, acts or omissions of the individual or any other person, the individual’s own experience or relevant attributes, the situation of the individual at any relevant time and any other relevant external facts); which of those facts the individual has proved; and whether, viewed objectively, those proven facts do amount to an objectively reasonable excuse for the default and the time when that objectively reasonable excuse ceased.
To be reasonable, an excuse must be objectively reasonable. It is not enough that it is based on a genuinely or honestly held belief.
It is not possible to give a comprehensive list of what might be a reasonable excuse. It will depend upon the specific circumstances in which the failure to make a statement occurred and the circumstances of the individual who has failed to make the statement, including an assessment of their experience, abilities or other relevant attributes. What is a reasonable excuse for one individual’s circumstances may not be a reasonable excuse for another individual, or the same individual in different circumstances.
If there is a reasonable excuse it must exist throughout the affected period.
HMRC would normally consider the onset of a serious illness, disability or serious mental health condition at the same time the declaration was due that made the individual incapable of making that statement to be a reasonable excuse.
HMRC will not accept as a reasonable excuse an excuse where an individual has not made a reasonable effort to meet the deadline such as, for example, forgetting about the deadline.
HMRC will not accept an unreasonable ignorance of the law as being a reasonable excuse. This includes ignorance of a law which is well known, simple and/or straightforward or where that ignorance is not objectively reasonable in the circumstances.
The following reasons are also unlikely to be accepted by HMRC as a reasonable excuse:
- pressure of work
- lack of information
- HMRC/insurance company did not remind me.
Unreasonable delay
The following examples should assist in determining what is meant by unreasonable delay:
(a) No unreasonable delay
Kate was unable to make a statement on time due to the death of a family member and, from the information available, HMRC accepted that the bereavement was a reasonable excuse.
Kate made a statement two weeks after the funeral.
As Kate had a reasonable excuse for not making the declaration on time, HMRC judged that, based on the facts of this case, the delay in correcting it was reasonable. The reasonable excuse provision applies so that the policy is reinstated as a qualifying policy or restricted relief qualifying policy from the date that it was issued or if relevant the significant modification or assignment was made as appropriate.
(b) Unreasonable delay
Lisa was unable to make a statement on time due to the death of a family member and, from the information available, HMRC accepted that the bereavement was a reasonable excuse.
However, Lisa had still not made a statement for a few months after the bereavement and did not notify her policy provider (or HMRC) of any other changes to her circumstances.
Although Lisa had a reasonable excuse for not making a statement on time due to the death of a family member, based on the facts of this case, waiting so long to correct that failure meant that she had failed to take reasonable care and so the delay became unreasonable. Lisa cannot take advantage of this provision, so the policy is treated as non-qualifying from the date of issue or if relevant the date of the significant modification or assignment as appropriate.