Reasonable excuses for not filing a Self Assessment tax return

Reasonable excuses for not filing a Self Assessment tax return


Even though the deadline for filing Self Assessment has been pushed to February 28, 2022, it does not mean you can do away with it altogether. It only means that the HMRC will not stamp a penalty on you if you file your return by the end of next month.

However, those planning to claim tax credits and who have submitted the estimated amount of their earnings for 2020/21 will still need to finalise the numbers by January 31, 2022. There is no extension on this deadline.

In the last couple of years, more and more taxpayers have been incurring penalties for filing their taxes late, and much of this is due to COVID-related delays. However, merely mentioning the pandemic as an excuse would not get the HMRC to pardon your delay.

You need to have what the HMRC deems a ‘reasonable excuse’. The trouble is that there is no one statutory definition of what constitutes a reasonable excuse, which means that each case is pretty much evaluated on its own merits.

So, if you are wondering whether you are eligible for a pardon or not, we have broken down some of the details for you:

What constitutes a reasonable excuse?

The HMRC has said that it defines a reasonable excuse as “something that stops a person from meeting a tax obligation despite them having taken reasonable care to meet that obligation.” 

A critical update in this context is the recent change to the HMRC compliance handbook section on reasonable excuses, which says that the “law does not require that a reasonable excuse is based on an unforeseeable or inescapable event”.

A reasonable excuse may be a single overarching reason, or it may be a combination of factors acting together to hinder the taxpayer from filing returns on time. 

Some types of excuses discussed in the compliance handbook include physical illness, mental health, ignorance of the law, reliance on another person, and various general examples. At the same time, what the HMRC deems a reasonable excuse for one taxpayer may not apply to another taxpayer.

The section also talks about how it is “necessary to consider what a reasonable person with the same experience and attributes as the taxpayer, who wanted to meet their obligation, would have done in the same circumstances and decide if the person’s action met that standard.”

Determining reasonable excuse

When a taxpayer requests a pardon on the grounds of a reasonable excuse, there is a four-step procedure to determine whether or not it is genuinely reasonable:

  • Determining which of those facts can be proven based on the known evidence
  • Establishing the facts that the taxpayer is citing to support the reasonable excuse plea
  • Deciding whether the taxpayer remedied the failure without unreasonable delay by the time the reasonable excuse stopped or immediately after
  • Determining whether the facts indeed do indicate a reasonable excuse when viewed objectively and how long that reasonable excuse was in play

The role of timing

At what time the reasonable excuse arose plays a vital role in the verdict. Only if the reasonable excuse arose on or before the date of the obligation is it deemed valid.

For instance, a business that shut down after the date on which the taxes were due cannot claim a reasonable excuse because the returns were already overdue when the business shut. A general inability to pay is also not a valid excuse.

The second part to this is that the defendant should have been proven to have addressed the issue without unreasonable delay as soon as the reasonable excuse ended. These two provisions extend to COVID-related delays as well.

What does not make for a reasonable excuse?

While every case will be considered on its own merits, the HMRC, in its compliance handbook, provides some examples of circumstances that will not be counted as a reasonable excuse, such as lack of information, insufficiency of time, or not getting reminders from the HMRC about the tax obligation.

Another circumstance that is not a reasonable excuse is an insufficiency of funds. However, an exception might be made if the taxpayer can prove that the insufficiency was owing to circumstances beyond their control.

Reliance on a third party

In some instances, reliance on a third party such as an accountant may count as grounds for a reasonable excuse. This usually happens when it is proven that the defendant “took reasonable care to avoid the relevant failure.”

For instance, if the taxpayer sent regular follow-up emails about the tax obligation to their accountant, who delayed the filing nonetheless, it counts as reasonable care taken on the taxpayer’s part.

Another instance is if wrong information was provided by a qualified advisor whom the taxpayer trusted and listened to.

When the reasonable excuse plea fails

If the HMRC does not accept that there was a reasonable excuse, the taxpayer might still be able to ask for a statutory review and appeal against the tax penalty at a tribunal. There may also be scope for a penalty reduction on the grounds of special circumstances.

Why fall into this trap when you have 3E'S Accountants?

Please note: The late payment penalty of 5% of the outstanding tax is also waived if the tax is paid in full by 1 April, 2022. However, a 2.75% interest will be charged on any tax paid late from February 1, 2022.

There is no reason for you to delay filing your Self Assessment when you have us by your side. We undertake a range of activities for you, including finalising accounts, preparing and filing SA100 with the HMRC and minimising overall tax liability and personal income.

Again — the deadline to complete a tax return for the 2020 to 2021 tax year is February 28, 2022. You still have time. Get in touch with us at the earliest!


Dishant Desai, an ACCA-qualified Partner and Director of Operations at 3E’S, brings a wealth of experience from 14+ years in UK accounting. He likes to write about innovative tax strategies and cloud accounting solutions to optimize individual and business financial health.

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