Tips & Advice
When “Reasonable Excuse” Can Quash HMRC Penalties
Published: 11 September 2025
Reading time: ~4 minutes
Sayrun Lamuth v HMRC: The Case In Brief
Sayrun Lamuth jointly owned a UK rental property with her ex-husband who lived overseas. They agreed she would pass her share of rent to him to hold for their children. In March 2017 she opened a letter to him from HMRC approving the non-resident landlord arrangement. She believed it meant the rent she received was not taxable in the UK.
On her 2016 to 2017 Self Assessment return she did not include the property income and did not flag it in the “Any other information” box. She later wrote to HMRC to explain and ask what to do. No reply came. In 2019 HMRC told her by phone that her Self Assessment record had closed because she only had pension and small investment income.
In March 2024 HMRC confirmed by phone that she did need to declare her 50 per cent share of rents. She filed five years of tax returns in May 2024 and paid the tax in September 2024. HMRC charged late payment penalties of £1,050. She appealed.
What The Tribunal Decided
The First-tier Tribunal found she had been genuinely mistaken and that it was objectively reasonable to think the rent did not need declaring, given she had asked HMRC for advice and received no reply. It was also reasonable to wait for a tax calculation before paying. With a reasonable excuse, the penalties were cancelled.
The Tribunal also said that even without a reasonable excuse, “special circumstances” would have reduced the penalty to nil because HMRC had failed to respond to her request for guidance. The appeal was allowed. Case: Sayrun Lamuth v HMRC (TC09578).
Why This Matters For Landlords
Lamuth underlines that context matters. A landlord who keeps records, seeks guidance and acts promptly once told what to do may have grounds to appeal penalties. It does not remove the tax due, but it can affect late filing penalty and late payment penalty outcomes.
Reasonable Excuse: Where Is The Line
HMRC accepts that a reasonable excuse can arise from events outside your control or from acting on advice that seemed reliable. Simply forgetting rarely helps. In Lamuth, the key points were a believable misunderstanding, attempts to get HMRC guidance, and quick action once the position was clarified. These are helpful reasonable excuse examples for landlords.
Practical Steps If You Missed Declaring Rent
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Gather facts. Work out the periods, the rental income, and expenses for self assessment property income.
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Correct the position. File any outstanding returns and pay the tax and interest.
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Explain clearly. Include a short chronology in a penalty appeal letter, with dates of letters and calls.
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Evidence your care. Keep copies of HMRC correspondence, notes of calls, and any professional advice.
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Appeal on time. Use HMRC’s penalty appeal process and, if offered, the reasonable excuse form.
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Keep it simple. Plain English, short paragraphs, and only facts you can support.
Common Misunderstandings To Avoid
Non-resident landlord approval does not make UK rental income tax free for UK owners. Passing rent to someone else or into a trust usually does not remove your UK tax responsibilities. Interest normally still accrues even if penalties are cancelled.
When To Get Help
If you are unsure about rental income tax UK rules, contact us. We work with clients across the UK remotely and can review your landlord tax obligations UK, draft the appeal, and help put systems in place so the problem does not recur.
See our dedicated support for landlords on our Property Investors page.
Contact Us to discuss your situation and next steps.
How To Structure A Penalty Appeal
Keep it to one page if you can. Head it “Appeal against HMRC penalties”. Set out who you are, the periods, what went wrong, what you did to check, and the steps taken to correct matters. Attach supporting documents. Ask HMRC to consider both reasonable excuse and special reduction for special circumstances.
Key Takeaways From Lamuth
Act promptly, keep evidence, and explain your thinking. If HMRC has not replied to your request for guidance, say so. A fair and credible timeline can make the difference in an HMRC penalty appeal.
FAQs On Reasonable Excuse HMRC Penalties
Does paying the tax remove penalties?
Not automatically. HMRC charges interest and may charge penalties. If you had a reasonable excuse, you can ask HMRC to cancel the penalties, as in Lamuth. Interest usually still applies if you pay tax late.
Does a non-resident landlord letter mean UK rent is not taxable?
No. It deals with how rent is collected and taxed at source. It does not remove your duty to report UK rental income that is yours.
What should I include in a penalty appeal letter?
A clear timeline, copies of letters or call notes, and proof that you acted once you understood the rules. Keep it factual and concise.
Do I need to use the reasonable excuse form?
You can appeal by letter or online. The reasonable excuse form can help structure your explanation, but the key is a clear, evidenced story.
Can I claim reasonable excuse if I simply forgot?
Usually not. HMRC expects reasonable care. Evidence that you sought advice or relied on guidance is more persuasive.
Disclaimer
This article is provided for general informational purposes only and does not constitute tax, legal, accounting, or financial advice. The information is based on UK law and HMRC guidance as at the date of publication, but rules and interpretations may change. We do not accept any liability for actions taken, or not taken, based on this content. Always seek tailored advice from SCCS Accountants before making financial or business decisions.