What is a reasonable excuse for the late filing of a personal tax return?

An interesting tax case which covers this topic is that of Ann Hauser vs HMRC.

HMRC had assessed penalties on the tax payer because they said she had not filed her tax return for 2012/13 by the filing deadline of 31 Jan 2014.

The tax payer received an initial £100 penalty during Feb 2014, she then replied to HMRC saying that she had filed her tax return by 31 Jan and not only that but she had also paid the tax owed per her tax return.

HMRC replied saying that they had never received the tax return and that if she had filed it she would have received a confirmation email, so they asked her to provide evidence that her online tax return status for 2012/13 showed as 100% complete in the online tax return system.

There was various correspondence between the tax payer and HMRC and the tax payer ended up re-submitting her tax return with HMRC, but she took her case to the first-tier tribunal to appeal the late filing penalties that had increased substantially from the initial £100 to over £5,000.

Reasonable Excuse For Late Tax Return

At tribunal the outcome was that the judge decided that the tax payer did actually have a reasonable excuse for the late return which was:

  • HMRC had told her at some point during the various correspondence that there had been a possible glitch with their system, at which point the tax payer re-filed her tax return within a reasonable amount of time.
  • HMRC had also told her that she would have received a confirmation of filing email from the HMRC tax return system and she should have known that by not receiving this that her tax return had not been filed. However she would only have received this email if she had signed up to this HMRC email notice service, which she had not done, so this was not a valid point.

This case was very finely balanced and could have easily gone against the tax payer, which would have resulted in significant penalties, so as good as it is to see a tribunal favour the side of the tax payer, we would recommend that if you file your own tax returns, to make sure it has been filed by keeping a copy of the confirmation email, if you’re signed up to get one, as well as keeping a screenshot or other proof of filing from the tax return system itself.

What usually counts as a reasonable excuse for filing a late tax return?

HMRC lay out their guidelines here  as to what they will usually consider reasonable excuses for a late tax return, which will normally be something unexpected or outside your control such as the below, these are general guidelines only:

  • a partner or close relative passing away not long before the tax return deadline
  • a critical / serious illness
  • a computer or software failure
  • service issues with HMRC’s online system
  • postal delays that were outside of your control (you need to be able to prove that you posted your documents with plenty of time to reach HMRC in normal circumstances)

A key point is that you have to submit your tax return as soon as possible after the reasonable excuse is resolved – ideally get your return filed before you make your appeal against late penalties.

You will need to submit your appeal within 30 days of the date of the penalty notice.