Glossary · UK
What is Reasonable Excuse (HMRC Penalty Defence)?
A defence against HMRC penalties where a genuine, unforeseeable event prevented timely compliance.
Full Definition
HMRC can impose penalties for late filing, late payment, and errors in returns, but a taxpayer who has a 'reasonable excuse' for a failure may have the penalty cancelled or reduced. HMRC's guidance (CH71300) describes reasonable excuse as something that stopped the taxpayer from meeting a tax obligation that they took reasonable care to meet. Examples include serious illness, bereavement of a close relative, or HMRC's own systems failure. Importantly, lack of funds is not accepted as a reasonable excuse for late payment (though it may support a Time to Pay arrangement). The reasonable excuse must cover the entire period of the failure, and the taxpayer must remedy the failure without unreasonable delay once the excuse ceases. Appeals are made to HMRC in the first instance and then to the First-tier Tax Tribunal.