Reasonable excuse – It depends upon the facts!

HMRC have recently won 2 cases where the taxpayer failed to show they had ‘reasonable excuse’ for their conduct and so suffered penalties.

In Crownfield the finance director was unfortunate in that he had not appreciated that the tax climate had changed.  In earlier times he had been able to negotiate making PAYE payments late.  Thus, cash flow problems had led him to assume HMRC would accept late payment.  Indeed, he admitted he may have paid on time if he had realised there was a penalty.  The Tribunal found that this effectively precluded saying that any unexpected event was a legitimate excuse.

In EN Jones the taxpayer argued that neither her advisers nor HMRC had told her how much tax was due, so she had a reasonable excuse for not paying on time.  The Tribunal found that she had been under self-assessment for some time, so knew tax was due each January 31.  She should therefore have been more active in finding out what was due.


Again the case law points to the fact that taxpayers have a duty to be active and diligent in meeting their tax obligations, but implicitly reasonable excuse can go beyond ‘death, disease or disaster’.  It all depends upon the facts and being ‘reasonable’.