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COVID-19: HMRC updates guidance on reasonable excuse

11 May: HMRC has updated its guidance on when taxpayers have a reasonable excuse for late filing of returns or late payment of tax to include being affected by coronavirus.

HMRC has expanded its guidance on appealing penalties to specifically consider coronavirus as a ‘reasonable excuse’. 

Taxpayers can appeal against penalties for late filing of returns or late payment of tax in circumstances where they have a reasonable excuse for the failure to meet the obligation. 

In its updated guidance, HMRC confirms that in submitting their appeal against a penalty due to the COVID-19 pandemic, taxpayers will need to explain how they were affected by coronavirus and demonstrate that they submitted the return or made the payment as soon as they were able to do so.

The list of items that HMRC already cites that may count as a reasonable excuse includes:

  • the taxpayer suffering a serious or life-threatening illness;
  • the taxpayer having an unexpected stay in hospital that prevented them from dealing with their tax affairs;
  • the death of a partner or another close relative shortly before the tax return or payment deadline; and
  • postal delays that the taxpayer could not have predicted.

HMRC also provides examples of what it does not accept as a reasonable excuse. The following could conceivably apply in the current crisis, but may remain unacceptable:

  • relying on others to submit a return;
  • failed payments owing to insufficient funds; and
  • not receiving a reminder from HMRC.

Where taxpayers anticipate that they will have insufficient funds to meet payment obligations, they should consider contacting HMRC to agree a time to pay arrangement and ensure that the associated tax returns are filed on time, where possible. This will assist in mitigating any penalties arising due to non-payment. 

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