Reasonable excuse for late filing penalties

With the 31 October filing deadline for paper returns fast approaching, it is essential that advisers do not forget that HMRC introduced new late filing and late payment penalties for the 2010/11 tax year onwards. (Click here for more details).  Advisers need to be aware that under the new penalty regime late filing penalties are charged even though there may not be any tax to pay or the tax due was paid on time. 

If your client misses the filing deadline then all is not lost, as HMRC may accept there was a reasonable excuse for not sending the return on time.  However, the facts and circumstances of the reasonable excuse will be considered by HMRC and they will wish to be satisfied that the event was exceptional or unexpected and beyond the person’s control.  For example, if the adviser’s computer system failed when the return was being sent to HMRC or your client was seriously ill immediately prior to the filing deadline. 

The adviser may wish to initially ask HMRC to undertake an internal review of the penalty.  If the outcome of the review is not satisfactory and the client wishes to continue with the appeal the adviser will need to appeal to the First Tier Tribunal. 

It is worth noting that a number of appeals against late filing penalties on the grounds of reasonable excuse have been determined by the First Tier Tribunal.  In most cases, for the appellant to be successful, the Tribunal needed to be satisfied that there was a legitimate and reasonable excuse.  

Reliance on a third party can be a reasonable excuse in certain cases; however it is not, in itself, sufficient reason to satisfy the Tribunal that the appeal should be upheld.  It is also critical that once the circumstances for the delay in filing the return no longer apply the person needs to rectify the situation straightaway, as the Tribunal will consider whether the reasonable excuse existed throughout the period the return remained outstanding.

The team at Gabelle has a deep understanding of HMRC’s penalty regimes and appeals process and can advise on the best solution for you and your clients.  Please contact John Hood on 020 7182 4747 or via email on for more information.