FHDDS51505 - Penalties, sanctions and offences: penalties – policy: Trading without approval - Reasonable excuse

(Finance (No 2) Act 2017, Schedule 13, para 7)

If the business can provide satisfactory evidence to support the fact that they had a reasonable excuse then they will not be liable to a penalty.

Penalties covered by reasonable excuse provision

In addition to the civil penalty for trading without approval (para 7 of Schedule 13 to the Finance (No 2) Act 2017), there is also a reasonable excuse provision covering the regulatory penalties for a failure to register by the required date and for breaches of FHDDS obligations and conditions (Regulation 17 of the The Fulfilment Businesses Regulations 2018).

It is important to note that in respect of penalty for trading without approval the reasonable excuse provision cannot be applied to deliberate contraventions. You must therefore establish the nature of the behaviour giving rise to the contravention before you can decide whether reasonable excuse needs to be considered.

What is a reasonable excuse?

In common with other penalty regimes, there is no definition in FHDDS legislation of what constitutes a reasonable excuse. The only legal specification is that reliance on any other person to do anything cannot be a reasonable excuse, unless it can be shown that the business itself took reasonable care to avoid the contravention.

There is extensive guidance on reasonable excuse in the Compliance Handbook CH71500 including examples of what is and is not a reasonable excuse. It is recommended that you read that guidance when considering whether a business may have a reasonable excuse for an FHDDS contravention.