Fines for late filing of returns

The fines for late returns have been increased. The old one hundred pound fine has been replaced if you file your return more than three months late and even higher if you are six months late.

How can they be set aside? Simply by having a “reasonable excuse”. So what is a reasonable excuse?

“Reasonable excuse”

Failing to do something due to “exceptional circumstances”.

HMRC are bound to have a strict interpretation but they are not always right. Many taxpayers believe that if HMRC have said that the taxpayer does not have a reasonable excuse they must be correct. But that is not so.

When you appeal stating that you have a reasonable excuse and HMRC does not accept that, you can appeal to the Tribunal. Luckily Judges have been finding for taxpayers thus ruling in some circumstances that the HMRC view is too strict.

I have had two late appeals where they were made considerably out of time, in fact both after several years, accepted. Many taxpayers have also found it worthwhile to appeal, so make sure you do.


In one of my cases the client, who had very little grasp of the English language, was not aware of what the accountant had done nor that he had not made an appeal in time. In the other case the client was abroad when assessments to conclude an investigation were made and his accountant had not made him aware that assessments had been raised. He only found out when he returned to the United Kingdom from several years in Spain. He approached me when under threat of being made bankrupt and I made the late appeals.

The HMRC guidelines indicate that postal delays will only be considered to be a reasonable excuse in the most “exceptional circumstances”. A taxpayer was fined for filing late when he had posted the return four days before the deadline. The Tribunal overturned the fine.

In another case before the tribunal further clarification meant that a “genuine error” can constitute a “reasonable excuse”. The circumstances were that the taxpayer believed his accountant would file his return but he did not.

Finally HMRC hold the view that taxpayers should set aside their tax monies so that they are always able to pay their taxes on time. Their guidance explains that not having the money to pay is not a reasonable excuse. In a recent Tribunal case the Judge refused to accept the HMRC view that insufficient monies could not amount to a reasonable excuse provided it arises from an unforeseeable or inescapable event.

This may be a common circumstance in the current financial climate and where HMRC refuse to accept your request to set aside the penalty get your accountant to appeal and take it before the Tribunal. Costs are not awarded by the Tribunal if you lose, so you have nothing to lose and everything to gain.