COVID-19: HMRC updates guidance on reasonable excuse

HMRC have updated their guidance on ‘reasonable excuse’, and confirmed that they ‘will consider coronavirus as a reasonable excuse for missing some tax obligations’.

‘Reasonable excuse’ is something in tax law which may, help a taxpayer where they have:-

• made late payments,
• filed a return late,
• appealed late against an assessment,
• failed to notify HMRC of a liability to tax, or
• failed to respond in an enquiry.

In layman’s terms, if HMRC are “on the taxpayer’s back”, and the reason is a failure to do something which wouldn’t have happened if they hadn’t had this excuse, they can escape the consequences.

When it comes to the current crisis though, it is important to note that taxpayers don’t just have ‘carte blanche’ to ignore their obligations and expect to escape the consequences.  They can’t just say “coronavirus” no matter what.  The guidance makes clear that they have to explain exactly how they were affected by the current situation.  They must also correct the position as soon as possible.

If you have issues surrounding late payment or missed deadlines, etc., it is worth exploring whether you can make a case for leniency based on how you were affected by coronavirus.  If you’re unsure, as always contact us for advice.

Andrew Cowe, Tax Manager, Brearley & Co