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For an overview of the concept of reasonable excuse, see A4.568.

The commentary below considers whether ignorance of the law and taxpayers' reliance upon it alone can constitute a reasonable excuse. It is an area in which the tribunals have produced inconsistent judgments.

Differences of opinion on this matter have come to light, particularly in the context of non-resident capital gains tax (NRCGT) returns and the high income child benefit charge (HICBC), with many taxpayers challenging penalties on the basis they were unaware of the change in the law. These are discussed under 'Whether taxpayers can rely on ignorance as a reasonable excuse in relation to new tax regimes' below.

Note that the NRCGT return regime was replaced in April 2019 with a new compliance regime, known as the capital gains tax UK property disposals return. This regime applies to UK residents disposing of UK residential property with effect from April 2020. See C1.110.¹