CH177330 | Sanctionable conduct by tax advisers: file access notice: failure to comply with a file access notice: reasonable excuse

A person will not be liable to a penalty for a failure to comply with a file access notice if they have:

• a reasonable excuse, and

• put the failure right without unreasonable delay after the excuse had ended.

There is no statutory definition of ‘reasonable excuse’ or ‘unreasonable delay’. Both phrases must be given their ordinary meaning. Each case must be considered on the facts, and in view of the person’s abilities and circumstances.

HMRC considers reasonable excuse to be something that stops a person from meeting an obligation despite them having taken reasonable care to meet the obligation.

To be a reasonable excuse for failing to meet an obligation, the excuse must exist on or before the date of the obligation. If the excuse arises after that date, the obligation has not been met and it cannot be a reasonable excuse for that failure.

The onus is on the person who failed to comply to satisfy HMRC that they had a reasonable excuse at the time of the failure. Whether the person has a reasonable excuse will depend on the circumstances in which the failure occurred and the individual experience, knowledge and other attributes of the person who has failed.

For these purposes:

• Insufficient funds is not a reasonable excuse, unless attributable to events outside the person control

• If a person relies on another to do anything, that is not a reasonable excuse unless the first person took reasonable care to avoid the failure,

• If the person had a reasonable excuse for the failure but the excuse has ceased, the person is to be treated as having continued to have the excuse if the failure is remedied without unreasonable delay after the excuse ceased.

For guidance on Reasonable Excuse, see CH160000.

FA1/SCH38/PARA25