What is a reasonable excuse for failing to register for tax under section 214 of the Revenue Scotland and Tax Powers Act 2014?

Under section 214, a person who can satisfy Revenue Scotland or the tax tribunal that they had a reasonable excuse for failing to meet a registration requirement will not be liable to a penalty under section 209. The excuse must relate to circumstances genuinely beyond the person's control, such as a natural disaster destroying business records and preventing timely registration.

Does a lack of funds count as a reasonable excuse for failing to register under section 214?

No, a lack of funds is generally not accepted as a reasonable excuse for failing to register for tax under section 214. The only exception is where the shortage of funds was caused by events genuinely outside the person's control. Simply not having enough money to pay for professional help with registration would not qualify as a valid defence against a penalty.

Can relying on another person to register be a reasonable excuse under section 214?

Delegating a registration task to another person, such as an agent or adviser, and that person failing to act does not automatically constitute a reasonable excuse. The taxpayer must demonstrate they took reasonable care to ensure the task was completed properly. Without evidence of such care, the failure of a third party will not protect the taxpayer from a penalty.

What happens if a reasonable excuse for failing to register subsequently ceases to apply?

If a person initially had a valid reasonable excuse that later ceased, they will still be treated as having had the excuse for the entire period of non-compliance, provided they remedied the failure without unreasonable delay after the excuse ended. The taxpayer must act promptly to register once the obstacle preventing compliance has been removed.

Revenue Scotland and Tax Powers Act 2014 section 214

Reasonable excuse for failure to register for tax etc.

Section 214 sets out the circumstances in which a person can avoid a penalty for failing to register for tax by demonstrating they had a reasonable excuse for the failure.

A person who can satisfy Revenue Scotland or the tax tribunal that they had a reasonable excuse for failing to meet a registration requirement will not be liable to a penalty.
A lack of funds is not considered a reasonable excuse unless it was caused by events outside the person's control.
Relying on another person to carry out a task is not a reasonable excuse unless the person took reasonable care to avoid the failure.
If a person had a reasonable excuse that later ceased, they will still be treated as having had the excuse provided they put the matter right without unreasonable delay after the excuse ended.

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