Revenue Scotland and Tax Powers Act 2014 section 178

Reasonable excuse for failure to make return or pay tax

Section 178 explains how a taxpayer can avoid penalties for late returns or late tax payments by demonstrating that they had a reasonable excuse for the failure, while also clarifying what does and does not count as a reasonable excuse.

• A taxpayer who can demonstrate a reasonable excuse to Revenue Scotland or the tribunal on appeal will not be liable to penalties for failing to make a return or failing to pay tax on time.
• A shortage of funds is not accepted as a reasonable excuse unless it was caused by events outside the taxpayer's control.
• Relying on another person (such as an agent or adviser) to carry out a task is not a reasonable excuse unless the taxpayer took reasonable care to avoid the failure.
• If a taxpayer had a genuine reasonable excuse that later ceased, they will still be treated as having the excuse provided they put things right without unreasonable delay after the excuse ended.