Perrin v HMRC: The Four-Step Reasonable Excuse Test

HMRC says your excuse isn't good enough. You missed a deadline, or you filed late, and now you're facing a penalty. You think you had a perfectly good reason—but HMRC has rejected it. Maybe they told you that a reasonable excuse requires some kind of "unforeseeable event." Maybe they implied that not knowing about a legal requirement is never an excuse.

If any of that sounds familiar, you need to know about Perrin v HMRC. In 2018, the Upper Tribunal set out a four-step test for reasonable excuse that has become the framework for every penalty appeal since. The decision rejected HMRC's narrow approach, warned them it could lead to costs orders against them, and confirmed that the test is personalised to your circumstances—not some impossible standard plucked from the air.

Here's what happened, what the tribunal decided, and what it means for your appeal.

What This Case Was About

Christine Perrin was a self-assessment taxpayer who struggled with HMRC's online filing system. She was not a tax professional. She represented herself throughout—at the First-tier Tribunal (FTT) and at the Upper Tribunal (UT).

In January 2012, Mrs Perrin went online to file her 2010-11 tax return. She completed the form, printed a copy, and received a submission receipt with a reference number. Understandably, she thought she'd filed. She hadn't. The system required one more step to complete the submission, and she didn't realise she'd missed it.

This was the second time it had happened. The previous year, HMRC had cancelled her penalty and suggested it "may be because you did not complete the final stage of online submission"—but without clearly explaining what specific step she had missed.

What followed was a months-long cycle of penalty notices, phone calls, and letters. HMRC mislaid her appeal. When she tried to fix the problem in June 2012, she accidentally filed a return for the wrong tax year. Daily penalties of £10 per day kept accruing. By the time she finally filed the correct return in September 2012, she owed £900 in daily penalties alone—on top of late filing and late payment penalties for the same year.

Mrs Perrin lost her appeal. But the guidance the Upper Tribunal gave in her case changed the law of reasonable excuse for everyone.

The Legal Conflict The UT Had To Resolve

Before Perrin, the First-tier Tribunal was split on a fundamental question: does "reasonable excuse" require your excuse to be objectively reasonable, or is an honest and genuine belief enough on its own?

Some tribunals—notably Chichester v HMRC [2012] UKFTT 397 (TC) and Gray Publishing v HMRC [2014] UKFTT 113 (TC)—held that if a taxpayer genuinely and honestly believed they had complied, that belief was itself a reasonable excuse. It didn't matter whether the belief was objectively reasonable.

Other tribunals—following the earlier Clean Car Co Ltd v Customs and Excise Commissioners [1991] VATTR 234 and Coales v HMRC [2012] UKFTT 477 (TC)—held that a genuine belief was necessary but not sufficient. The excuse also had to be objectively reasonable. Different tribunals were reaching opposite conclusions on the same legal question, and unrepresented appellants had no way of knowing which test would apply to their case.

The Upper Tribunal granted permission to appeal specifically to resolve this conflict.

What The Upper Tribunal Decided

The Four-Step Test

At paragraph 81 of the judgment, the UT set out a structured approach for tribunals considering a reasonable excuse defence:

1. Establish the facts. What does the taxpayer say gives rise to a reasonable excuse? This includes beliefs, actions, omissions, the taxpayer's experience and attributes, and any relevant external circumstances.
2. Decide which facts are proven. The taxpayer must prove the facts they rely on, on the balance of probabilities—meaning "more likely than not."
3. Decide whether those facts amount to an objectively reasonable excuse. The key question: "was what the taxpayer did (or omitted to do or believed) objectively reasonable for this taxpayer in those circumstances?" The tribunal considers the taxpayer's experience, knowledge, and situation.
4. Decide whether the taxpayer remedied the failure without unreasonable delay after the excuse ceased. Even a valid excuse doesn't help if the taxpayer sat on it for months after the reason for the delay ended.

This framework has been applied in every reasonable excuse case since 2018. HMRC's own internal manual is now structured around it. Although Perrin arose from a self-assessment penalty, the four-step test applies wherever the law provides a reasonable excuse defence—including VAT, excise duty, CIS, and PAYE penalties. For worked examples and common scenarios, see our reasonable excuse guide.

HMRC Must Prove The Penalty First

Before reasonable excuse even comes into play, HMRC must prove the penalty is validly due. At paragraph 69, the UT stated: "A mere assertion of the occurrence of the relevant events in a statement of case is not sufficient. Evidence is required."

This is a point unrepresented appellants often overlook. HMRC must prove the basics—that a notice to file was issued, that your return was actually late, that the penalty notices were properly served. If HMRC cannot prove these things, the penalty falls before you even need to argue reasonable excuse.

Check your penalty notice carefully. Does it specify the correct tax year? Was it issued within the correct timeframe? Was the notice to file your return actually sent to you? For self-assessment daily penalties specifically, HMRC must prove that a notice warning of daily penalties was issued before the daily penalties started accruing—see our guide to self-assessment penalties for more on this requirement.

Honest Belief Is Necessary But Not Sufficient

The UT resolved the conflict between the FTT panels clearly: the purely subjective approach in Chichester and Gray was wrong in law.

At paragraph 74, the UT explained that where a taxpayer's belief is in issue—"I thought I had filed the return" or "I didn't think I needed to file"—the tribunal may accept that the taxpayer genuinely held that belief. But "that fact on its own is not enough." The tribunal must still decide whether that belief, in all the circumstances, was objectively reasonable.

The UT gave a vivid example. Imagine a taxpayer who was told by a friend in the pub that the filing requirement had been abolished. The taxpayer might genuinely believe this. But a tribunal would be unlikely to accept that belief as objectively reasonable—because a reasonable person would not rely on pub gossip about their tax obligations.

At paragraph 75, the UT summarised the correct test: "to be a reasonable excuse, the excuse must not only be genuine, but also objectively reasonable when the circumstances and attributes of the actual taxpayer are taken into account."

The crucial words are "the actual taxpayer." The tribunal doesn't ask what an idealised, perfectly informed person would have done. It asks what was reasonable for you—given your experience, your knowledge, and your situation at the time.

Ignorance Of The Law Is Not Automatically Fatal

It's a common assumption that not knowing about a legal requirement can never be a reasonable excuse. HMRC has sometimes argued this. The UT disagreed.

At paragraph 82, the UT stated: "We see no basis for this argument." It explained: "Some requirements of the law are well-known, simple and straightforward but others are much less so. It will be a matter of judgment for the FTT in each case whether it was objectively reasonable for the particular taxpayer, in the circumstances of the case, to have been ignorant of the requirement in question, and for how long."

This is particularly significant for obligations that catch people off guard—like the High Income Child Benefit Charge, where taxpayers who have never been in self-assessment are suddenly required to register and file a return because their income crosses a threshold. Whether ignorance of such a requirement is a reasonable excuse depends on who you are and what you could reasonably have been expected to know.

Paragraph 82 does not mean ignorance of the law is usually a reasonable excuse. It means it is not automatically disqualified. The tribunal still applies the objective reasonableness test—but it does so by reference to the particular taxpayer's circumstances, not by applying a blanket rule.

HMRC's "Unforeseeable Event" Test Is Wrong

At paragraph 83, the UT delivered perhaps its sharpest rebuke of HMRC's approach. It noted that HMRC "sometimes continue to argue that the law requires any reasonable excuse to be based on some 'unforeseeable or inescapable' event." The UT pointed out that this echoes the dissenting remarks of Scott LJ in Commissioners for Customs and Excise v Steptoe [1992] STC 757—in other words, the losing argument in that case.

The UT said this position was "unsustainable" and warned: "In an appropriate case where HMRC base their argument on this unsustainable position, the FTT may well consider it appropriate to exercise their jurisdiction to award costs against HMRC for unreasonable conduct of the appeal."

That costs warning is unusually strong. The same applies, the UT said, to HMRC's "mantra" that an "unexpected or unusual event" is required. The statutory phrase is "reasonable excuse"—and those are the words to be applied.

Since Perrin, HMRC's internal manual no longer uses the "unforeseeable or inescapable event" language. But if HMRC raises this argument in your case, paragraph 83 gives you a direct response. For how costs work in tribunal proceedings, see our guide to tribunal tracks and costs.

The Online Filing Trap

At paragraphs 84-86, the UT expressed concern that HMRC's online filing system could be a trap—particularly for taxpayers with limited technology experience. Mrs Perrin received a submission receipt and a reference number but had not actually completed the filing. A reasonable person in her position could easily have thought the job was done.

The UT asked HMRC for information about how the system worked after the hearing. HMRC confirmed that the system had been updated to show "not submitted" in bold at the top of the return until the final step was completed. The UT suggested that HMRC's GOV.UK guidance videos should "emphasise the point at which, and how, the taxpayer can be sure that his or her return has been submitted and accepted."

Although the specific online filing trap has been partly addressed, this passage remains relevant for any technology-related excuse. If you believed you had submitted a return or payment because the system gave you misleading feedback, paragraphs 84-86 support the argument that reliance on the system's apparent confirmation was objectively reasonable.

How Perrin Has Been Applied Since 2018

The four-step test has been cited in hundreds of FTT and UT decisions. Here are the most significant refinements.

Harrison v HMRC [2022] UKUT 216 (TCC). The UT clarified that the four-step test is "not intended to be a strait jacket"—it represents best practice, not a rigid checklist. Crucially, the UT confirmed that steps 3 and 4 are separate inquiries. The length of time the failure continued is relevant only at step 4 (whether you acted promptly once the excuse ended), not at step 3 (whether the excuse itself was reasonable).

The UT also confirmed that mental health problems can be a reasonable excuse in principle, but the tribunal needs evidence—a GP letter or medical records, not just an assertion.

Raggatt v HMRC [2018] UKUT 412 (TCC). The first UT case to apply Perrin to late payment penalties (rather than late filing). Mr Raggatt was a QC of 40 years' experience whose criminal legal aid practice had been hit by government cuts. The UT had "considerable sympathy" but dismissed the appeal—a senior barrister could reasonably have been expected to provision for tax liabilities. This confirms that the personalised test in step 3 can work against you as well as for you.

Marlow Rowing Club v HMRC [2020] UKUT 20 (TCC). The rowing club had relied on specialist VAT accountants and counsel before issuing a zero-rating certificate that turned out to be wrong. The UT allowed the appeal, finding the reliance on professional advice was itself objectively reasonable. The key passage—that reasonable excuse "will depend on the evaluation of the particular facts relevant to the taxpayer's circumstances"—is now quoted in HMRC's own internal manual (CH160950).

B&M Retail Ltd v HMRC [2024] UKUT 409 (TCC). An excise duty penalty case where the UT allowed the appeal on procedural fairness grounds. The FTT had rejected B&M's unchallenged witness evidence without giving the witness an opportunity to address the tribunal's concerns.

This matters at Perrin step 2—when the tribunal decides which facts are proven, it must do so fairly. If you give oral evidence at a hearing, the tribunal cannot reject your account without putting its concerns to you. For more on what to expect at a hearing, see our guide to preparing for your tribunal hearing.

What This Means For Your Appeal

If you're appealing a penalty and believe you had a reasonable excuse, here's how to use the Perrin framework.

1. Check whether HMRC proved the penalty was validly imposed. Before arguing reasonable excuse, look at the basics. Was the notice to file issued? Were penalty notices properly served? Was the penalty calculated correctly? If HMRC has not proved these things, the penalty may fail at the first hurdle (paragraph 69).

2. Identify your specific excuse and gather evidence for it. Step 2 of the Perrin test requires you to prove the facts you rely on. If your excuse is a health condition, get a GP letter. If it's reliance on an accountant, gather the correspondence showing what instructions you gave and what you were told. If it's ignorance of a legal requirement, consider what information was available to you and why it was reasonable for you not to know.

   See our guide on preparing evidence for your hearing.

3. Frame your excuse as objectively reasonable for someone in your position. Step 3 asks: "was what the taxpayer did (or omitted to do or believed) objectively reasonable for this taxpayer in those circumstances?" Emphasise the attributes that make your situation different—your experience, your access to information, your personal circumstances at the relevant time.

4. Show you acted promptly once the excuse ended. Step 4 asks whether you remedied the failure "without unreasonable delay." If you discovered the problem and filed within days, that is strong. If months passed without action, the tribunal will want to know why. This is separate from the excuse itself—even a completely valid excuse is lost if you delay unreasonably once the reason for it has gone.

5. If HMRC argues you needed an "unforeseeable event," cite paragraph 83. The UT called this position "unsustainable" and flagged the possibility of costs against HMRC. You don't need to have experienced an unforeseeable disaster. You just need to have had a reasonable excuse.

6. If your excuse involves ignorance of a legal requirement, cite paragraph 82. Not all legal requirements are obvious. Some are obscure, technical, or easy to miss—particularly for someone encountering the tax system for the first time. The UT confirmed that the question is whether it was objectively reasonable for you, in your circumstances, not to have known.

7. Consider requesting an HMRC review first. Before going to the tribunal, you can ask HMRC to carry out a statutory review of the penalty decision. The reviewing officer looks at the case with fresh eyes and may accept your excuse without the need for a hearing.

If you decide to appeal to the tribunal, you have 30 days from the date of HMRC's decision (or review conclusion letter) to file your appeal. There is no fee to file. For the step-by-step process, see our guide on how to appeal to the tax tribunal. For help structuring your case, see writing your grounds of appeal. If the deadline has already passed, you may still be able to make a late appeal.

The Judgment And Key Sources

The judgment:

• Christine Perrin v HMRC [2018] UKUT 156 (TCC) (BAILII)

Legislation:

• Paragraph 23, Schedule 55, Finance Act 2009 — reasonable excuse for late filing penalties
• Paragraph 16, Schedule 56, Finance Act 2009 — reasonable excuse for late payment penalties

Post-Perrin cases discussed:

• Harrison v HMRC [2022] UKUT 216 (TCC) — "not a strait jacket"; steps 3 and 4 are separate
• Raggatt v HMRC [2018] UKUT 412 (TCC) — objective test applies to late payment; taxpayer attributes matter
• Marlow Rowing Club v HMRC [2020] UKUT 20 (TCC) — reliance on professional advice; now in HMRC's manual
• B&M Retail Ltd v HMRC [2024] UKUT 409 (TCC) — procedural fairness at step 2

On this site:

• What is a reasonable excuse? — four-step test, worked examples, common scenarios
• HMRC penalties explained — penalty framework and behaviour classifications
• Self-assessment penalties — SA-specific penalty calculations and defences
• High Income Child Benefit Charge — ignorance of the law in practice
• Writing grounds of appeal — structuring your penalty appeal
• How to appeal to the tax tribunal — step-by-step filing guide
• Late appeals to the tax tribunal — applying after the deadline
• HMRC internal review — requesting a review before tribunal
• Preparing for your tribunal hearing — evidence and hearing day
• Tribunal tracks and costs — costs regime and the paragraph 83 warning
• Tooth v HMRC: deliberate inaccuracy — companion case analysis

This article is for informational purposes only and does not constitute legal or tax advice. For advice specific to your situation, consult a qualified tax adviser, accountant, or solicitor.