Reasonable excuse -penalties

If you read the judgement it appears to relate to someone being late in commencing an action due to an inability to fund legal advice. Not paying outstanding penalties

I doubt whether " she cannot bear to explain her circumstances because of their personal and sensitive nature"will be acceptable to HMRC who will probably only offer time to pay.

The logic is inescapable that were HMRC to make poverty an excuse for avoidance of penalties they would be inundated with similar requests

Good luck with the attempt and please let this forum know the result because if you are successful I have 4 clients waiting to join what will become a lengthy queue

Review  http://charterconsultation.hmrc.gov.uk/manuals/chmanual/CH92250.htm

There is also a specific case that says that lack of funds is a reasonable excuse

Let's get something clear to begin with - HMRC simply do not recognise ANYTHING as a "reasonable excuse".  They are totally unreasonable, and seem to believe that filing a return is everyone's priority.

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As an example, one of our clients was the victim of a burglary at his business premises.  This occurred over the Christmas break, and the thieves helped themselves to money, company credit cards, and all his computers.

So, he was left with approximately 20,000 invoices, a pile of bank statements, and no accounts records (all on computer).  HMRC's attitude?  They did NOT consider needing time to re-enter 20,000 invoices to constitute a reasonable excuse for the return being submitted late.  They then threatened penalties if estimated figures were used until the actual figures were obtained.   

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On a personal note, I had a heart attack one month before my return was due. To quote HMRC - "we do not consider a heart attack to constitute a reasonable excuse for not submitting a return on time".  Needless to say they were given suggestions as to where to place any penalties issued (certain anatomical orifices were mentioned) and assured that the matter would be placed before a court to see whether fighting for one's life constituted a reasonable excuse for not giving priority to completing a tax return.  Oddly HMRC declined my invitation to discuss the matter in a court room and cancelled all penalties.

  Shortage of funds

Being short of money is not in itself a reasonable excuse for a wrongdoing. However, it is possible that a series of unforeseeable circumstances outside the person’s control, which directly led to the lack of money, could be a reasonable excuse.

It is difficult to envisage a situation in which shortage of funds can be offered as a reasonable excuse for committing a non-deliberate VAT or excise wrongdoing. In the unlikely event that it is, you should consider critically

• whether the wrongdoing was in fact non-deliberate (reasonable excuse does not apply to deliberate wrongdoings), and
• the circumstances that directly led to the shortage of funds.

The above is an extract from HMRC guidance quoted by Steve.  I would like to hear HMRC 's definition of "unforeseeable cicumstances" apart from the third coming and nuclear war I don't think it would be very helpful

It is my understanding that a reasonable excuse could arise because of an immediate cashflow crisis caused an unforseeable sudden and significant bad debt.