HMRC have frequently defined a ‘reasonable excuse’ in these words: “reasonable excuse is normally an unexpected or unusual event that’s either unforeseeable or beyond your control.” First Tier Tribunals have sometimes highlighted that this is incorrect, as the wording originates from a dissenting judgment in the Steptoe case.
For the first time to my knowledge the Upper Tier has explained why HMRC are wrong to use this wording. This paragraph appears in the decision of ETB (2014) Limited:
As an aside, we note that in July 2016 HMRC issued an updated version of factsheet CC/FS12 on penalties for VAT and excise wrongdoings. In that document, HMRC express the view that a “reasonable excuse is normally an unexpected or unusual event that’s either unforeseeable or beyond your control”. There are strong echoes there of Scott LJ’s dissenting judgment in Steptoe and it certainly does not reflect the views of the majority in that case. The wording in CC/FS12 is unfortunate as it could lead a taxpayer or HMRC officer or even a tribunal into error when assessing whether particular circumstances constitute a reasonable excuse
That the Steptoe decision was released in 1992 is also disappointing. HMRC have used this incorrect wording for 24 years!