• 15 Mar 2018
  •   Comments Off on When is paying your tax late excusable?

Paying your taxes is one of the most fundamental obligations you have as a citizen of any country. It goes without saying, then, that not paying your taxes will result in a penalty. In the case of the UK, the HMRC has been aligning penalties for most taxes ever since 2008. Among the regulations established was the fact that there was a “reasonable excuse” clause dedicated to late paid taxes. It’s not all clear cut, however – in 2017, the First-Tier Tribunal (FTT) turned down an appeal against penalty for late tax payment, commenting that the HMRC’s argument is wrong. How, then, can being late with tax payment be excused?

Lack of money – a reasonable excuse?

The case mentioned above occurred when NSF Unities didn’t pay its VAT on time, which prodded HMRC to charge a penalty, called a default surcharge. NSF decided to make an appeal, as they claimed to have a reasonable excuse – which, as mentioned earlier, by HMRC’s standards, should be reason enough to remove the penalty. The reason given was that HMRC owed NSF money due to excess CIS deductions. However, to that HMRC replied that NFS was in a position to make other arrangements to pay VAT. Additionally, according to  VAT rules, a lack of money is not a reasonable excuse. On the other hand, the Court of Appeal stated some years ago that it can play the part of a reasonable excuse, as long as there are extraordinary circumstances around that lack of money. It’s worth pointing out that in any other types of late payment penalty, a lack of money may also be an excuse under exceptional circumstances.

HMRC’s argument – why was it wrong?

In the end, the FTT ruled that NFS had to be penalised, but it wasn’t because of how HMRC argued their case. According to the HMRC, in order for the reason for not paying to be reasonable, it must be both unforseeable and inescapable. The courts, however, noted that the payment only has to be inescapable. This is the only criteria necessary for the excuse for paying late being reasonable. The NFS lost the case only due to the fact that they had no evidence to support the fact that the delay was unavoidable.

So what can you do?

In order to avoid any unpleasantness in the future, while the law is on your side as long you can support your claim that your delay was reasonable, it is always a good idea to let HMRC know as soon as possible that you might miss the deadline due to unavoidable circumstances. This gives you room for peaceful settlements and negotiations, such as instalment payments, which will help you avoid late payment penalties despite the fact that you cannot pay on time.


I hereby agree to the processing of my personal data by Britannia Accountancy Services Ltd with the head office at 12 Mulberry Place, Pinnell Road, London, SE9 6AR for the purposes of receiving a reply. I have the right to access and edit my personal data.


Britannia Accountancy is a professional and proactive firm that have served all my financial requirements for the past 5 years. It is highly tailored to my needs and there is always someone available if any queries or questions need answering. A professional, friendly and supportive service that I can highly recommend.


I’ve been using Britannia Accountancy Service for well over 10 years for all my businesses. We’ve been extremely happy with their personal service. You know who you’re speaking to and you get replies and work done quickly. I would be very happy to recommend BAS to any small or medium business like ours.


I have referred quite a few people to BAS and in difficult situations, we got used to “Well, call them; they will know how to deal with this”. This is, in my understanding, a very good indication of the level of service


As a new company formed just six months ago we have been very lucky to have had Britannia Accountancy Services recommended to us. BAS have been a great help to us in these early stages of our business. They are helpful, offering good advice and have always responded very quickly when we have asked for help. In addition, our payroll and VAT returns have been completed in good time and professionally presented. We would happily recommend them to anybody.


We have been a loyal customer of Britannia Accountancy for over 5 years. Service provided always to perfection, timely procedures, sound advice and support whenever needed. BAS have a very professional and knowledgeable team in many additional fields, including export, customs and global trading. They provide excellent support in Russian and English which is a real bonus. Very highly recommended.

If you have questions, please contact our professional team