We explain the rules
In recent news items about the self assessment filing deadline we have said that you may not get a late-filing penalty if you have a ’reasonable excuse’. As the 31 January deadline approaches, this topic is appearing in the media (it will be featured on BBC Radio 4’ Moneybox today). Here we give more information about what the term means.
If you file your 2011 self assessment tax return late you will get a penalty, even if you do not owe any tax. The deadlines are 31 October 2011 if you file a paper tax return and 31 January 2012 if you file online. The first penalty is £100. To read more about the rules on penalties, refer to our news item 31 January, an even more important date
However, you will not have a penalty if you have a reasonable excuse for filing late. ‘Reasonable’ excuse is not defined in law, but HMRC’s’ guidance explains how they interpret it.
There are no hard and fast rules – what is ‘reasonable’ will depend on the facts of the particular situation. But generally speaking, you may have a reasonable excuse if an unexpected or unusual event beyond your control prevented you from meeting the deadline. HMRC’s guidance no longer stipulates (as it used to) that a reasonable excuse must be ‘exceptional’.
Examples of a reasonable excuse might be:
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A serious illness made you incapable of filing your tax return.
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The death of a partner or close relative shortly before the deadline.
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The return was posted in good time but was lost or delayed in the post.
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Important documents have been lost, through theft, fire or flood, and can't be replaced in time.
You may also have a reasonable excuse if you had problems with the online filing process, such as:
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You received your online Activation Code, User ID or password late, even though you asked for them in good time.
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HMRC's own computer system fails.
HMRC will not accept excuses such as:
You must file your return as soon as possible after the reasonable excuse comes to an end. HMRC says it expects to receive it within 14 days of the problem ending. If you delay filing without a reasonable excuse you will get a penalty.
You should always make an effort to file on time, and not leave it in the hope that ‘reasonable excuse’ will get you out of trouble. If you have tried to get all the information but are missing some of it, you can file your tax return on time using provisional figures and send in the final ones as soon as possible.
If you file your return late and have a reasonable excuse, the best approach is to tell HMRC about it at the same time as you send in your tax return. You can do this either in a letter or (in the case of online filing) using HMRC’s special form. If you send a letter, it should be headed ‘REASONABLE EXCUSE CLAIM’ in large, bold letters. If you do this soon after the statutory filing date, and HMRC agrees that your excuse is reasonable, there should be time to prevent the issue of a late-fling penalty notice. However, if you are sent a penalty notice, you should appeal against it (within 30 days) and explain your reasonable excuse.
HMRC’s guidance is not law – it is just their interpretation of what the law means. Ultimately it is for the courts to determine what is a ‘reasonable excuse’. So if you think you have a reasonable excuse for filing late but HMRC does not agree, you can appeal against the penalty and have your case heard by an independent tribunal.