It is generally assumed that severe illness, or an accident, will constitute a reasonable excuse for a failure to submit or pay a VAT Return, or SATR. This should not be assumed. HMRC and, on Appeal, the Tribunal, will want to tease out some details. Here are some key questions to be asked:
- Is the taxpayer a sole trader, or company? How ‘essential’ is the individual to the running of the business, and to the submission and payment of Returns? Are other employees capable of ‘covering’ that person’s duties?
- Can you provide dates of the illness, or incident, and any diagnosis? Can you provide Doctor’s notes, to evidence the severity of the illness? Was the individual unable to work? And for how long?
The FTT case of Guy Choat is now being referred to by HMRC in relation to a claimed reasonable excuse. Para 28 reads: “The appellant is suffering from a long term ill-health and ill-heath can amount to a reasonable excuse. However, if the illness is long-term a reasonable taxpayer, conscious of his responsibilities, is expected to make arrangements for someone to act on his behalf.”
As the decision states, if a person is likely to be unable to work for a lengthy period, a reasonable business-person is expected to make other arrangements for someone to act on his/her behalf. A failure to do so may mean the reasonable excuse defence is exhausted.
You can read the Guy Choat decision here: http://www.bailii.org/uk/cases/UKFTT/TC/2017/TC05778.html
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