ECH21035 - Penalties: Reasonable Excuse
Section 118(2) TMA 1970
If as a fact the failure has occurred, the only way an employer
or contractor can avoid a failure penalty is to show he has a
'reasonable excuse'
The reasonable excuse must cover the whole of the period of
lateness.
Reasonable excuse cannot be defined in absolute terms. The
reasonableness will vary from case to case.
Generally, you are looking for some
- circumstance which
- is beyond the employer's or contractor's control and
- made the failure unavoidable and
- evidence that the failure was remedied without unreasonable delay once that obstacle was out of the way.
In all instances the ECO should
- ascertain, as far as possible, the employer's own reasons for the failure. This is best done during a meeting.
The ECO must
- listen and consider carefully what they are told. The explanation should be tested against information already held.
ECOs should bear in mind that
- it is not a statutory requirement for an End of Year return form to be issued by HM Revenue & Customs. (This text has been withheld because of exemptions in the Freedom of Information Act 2000)
- it is not a reasonable excuse to say that HM Revenue & Customs took no action to obtain a return.
- the statutory obligation lies with the employer under Regulation 73 or the contractor under Regulation 40A (for End of Year Returns) and Reg 4 (for Monthly Returns).
