Reasonable excuse for failure to notify

Most readers will be aware that TMA 1970 s 7 requires those who are ‘chargeable’ to income tax or capital gains tax to notify HMRC by 5 October following the end of the tax year unless they are already within the self-assessment regime. Although strictly this applies to any persons who are liable to those taxes (including trustees and personal representatives) it is most often relevant to individuals who are not required to file an annual tax return but who find themselves with a taxable gain or new source of income in a tax year. As employed individuals have little direct interaction with the tax system they may be unaware that they need to notify HMRC of their liability.

If a taxpayer fails to notify HMRC has 20 years to raise an assessment under TMA 1970 s 36(1A)(b). This is the same time limit...