Valid excuses for not paying RTI & PAYE penalties

You won’t have to pay a penalty for a late filing if HMRC agrees that there is a reasonable excuse for the payment being late and that you paid as soon as you reasonably could after the reason for lateness ended.

What is reasonable will be different from person to person depending on their individual circumstances. However, it is normally an unusual event that is either unforeseeable or beyond your control. It is not possible to give a precise list, however HMRC gives the following examples that might count as a reasonable excuse:

  • the death of a close relative or domestic partner around the time that payment was due
  • the payment is lost or delayed because of an unforeseen event – for example, a fire or flood at the sorting office where the payment would be held
  • serious illness of the person, or of a close relative, around the time the person should have made payment.

Some examples HMRC would not usually accept as reasonable, include:

  • pressure of work
  • lack of information
  • HMRC did not remind you to pay
  • ignorance of basic law and guidance.

In addition, the law says that HMRC cannot usually accept as reasonable:

  • cash flow problems/lack of money – HMRC cannot treat cash flow problems or lack of funds as reasonable unless they are due to unforeseeable events outside your control – if you are having difficulty paying there’s information in the next section, ‘What to do if you can’t pay’.
  • relying on someone else. HMRC cannot normally accept that you have a reasonable excuse just because you asked someone else to make the payment and they did not – however if you have done all you reasonably can to make sure the person does make the payment on time, you may have a reasonable excuse, for example, you may have explained carefully to the person what they have to do, and by when or you may have checked on their progress and reminded them.

If you think you have a reasonable excuse and you do not agree with the penalty, you can appeal.

You can appeal if you think:

  • the penalty is not due
  • the amount of the penalty is wrong
  • you had a reasonable excuse for the payment being late.

You can also appeal against HMRC’s decision not to accept your reasonable excuse if you still think you have a reasonable excuse. From April 2015, you will be able to appeal online against late payment penalties for the tax year 2015-16 onwards, using HMRC’s Online Service. This will not only allow appeals to be submitted electronically – in some cases HMRC will also be able to accept and settle the appeal automatically.

HMRC expects payments to be made on time. However if you are experiencing any problems in paying what you owe, you should contact HMRC before any payment is due. If HMRC agrees to allow you time to pay and you contact them before the payment is due they will not charge penalties on those payments covered by that agreement, providing you stick to the agreement.


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