Reasonable Excuse defence

Les Howard
VAT Consultant
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The Roderick Northam FTT decision is a helpful decision in relation to ‘reasonable excuse.’ It makes two key statements:

1. The ‘responsible trader’ test coined in The Clean Car Company test was approved. And this test, made in a VAT case, is clearly applied to other taxes. The Tribunal made these comments:

(16) The test I adopt in determining whether the appellant has a reasonable excuse is that set out in The Clean Car Co Ltd v C&E Commissioners [1991] VATTR 234 in which Judge Medd QC said:

"The test of whether or not there is a reasonable excuse is an objective one. In my judgment it is an objective test in this sense. One must ask oneself: was what the taxpayer did a reasonable thing for a responsible trader conscious of and intending to comply with his obligations regarding tax, but having the experience and other relevant attributes of the taxpayer and placed in the situation that the taxpayer found himself at the relevant time, a reasonable thing to do?"

       (17) Although the Clean Car case was a VAT case, it is generally accepted that the same principles apply to a claim of reasonable excuse in direct tax cases.

2. A reasonable excuse may be established where the taxpayer relied on an Accountant (or other third party), and that person failed to fulfil his responsibilities. The Tribunal stated, bluntly in para 41, that the failure by the accountants can constitute a reasonable excuse for his client. It is worth reading through the logic in paras 21-50. The Tribunal concluded that the taxpayer had done all that he could be reasonably expected to do to ensure his tax return was submitted on time.

The Tribunal also criticised HMRC’s application of the ‘special circumstances’ test. Had it not found for the taxpayer on the reasonable excuse ground, it would have allowed the appeal under this ground.

About Les Howard


Hi, I am a VAT Consultant, working mainly with charities. I am based in Cambridgeshire

I have over 20 years experience in VAT, and am currently also a part-time member of the Tax Tribunals.


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