Reasonable excuse (RE) is an important concept that effectively treats taxpayers as not failing to meet tax obligations. This can affect statutory assessment time limits and penalties. RE is not defined in legislation and HMRC’s guidance has changed over time so it is perhaps unsurprising that there is a significant body of case law on the topic. The cases demonstrate that the courts and tribunals consider RE to follow its ordinary meaning that it is an excuse that is reasonable depending on the case’s circumstances. The courts have considered RE in relation to a number of particular themes including adviser/HMRC errors; shortage of funds; ill health; and IT/postal issues. The concept of RE is also a defence from failure to satisfy the new ‘requirement to correct’ rules in the Finance Bill; if this draft legislation is enacted as envisaged it will represent a narrowing of the RE...
