Even though she had been robbed and had all her savings stolen, a woman was pursued by HM Revenue and Customs (HMRC) for penalties and surcharges for late payment of tax and it wasn’t until her accountant made representations before the Upper Tribunal that HMRC’s demands were overturned.
The woman faced surcharges regarding unpaid tax for all tax years from 2003/4 to 2008/9 and fixed penalties for late filing of returns for 2002/3 and 2007/8.
She was the victim of a violent robbery in 2003 and suffered continuing post-traumatic stress disorder (PTSD), which, she claimed, rendered it impossible for her to comply with her tax filing obligations. The Tribunal, however, supported HMRC’s contention that her mental condition was not a sufficient reason to excuse her failure to file her 2007/8 tax return and confirmed the surcharges levied for 2007/8 and 2008/9.
Following the robbery in 2003, the woman’s bank accounts were emptied and a substantial unauthorised overdraft was run up: it took more than two years for the bank to correct the position and during that time there were no funds to pay her taxes.
She suffered from severe depression and so was unable to work and became homeless. As her health improved, she eased herself back into employment and was able to work full-time again in 2009, although a psychiatrist’s report in early 2009 stated that her PTSD was likely to have an impact on her earning capacity in future years. Even though this opinion was given only a fortnight after the woman’s 2008/9 tax return was due to be filed, HMRC did not accept her PTSD as a ‘reasonable excuse’ for failing to file the return.
HMRC are known for taking a very hard line as regards compliance matters, which can cause great difficulties if the taxpayer has mental health issues.