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Reasonable excuse: ongoing illness

Simon SturmanComment

In Pradipkumar Hindocha v HMRC [2017] TC05838, the taxpayer's ongoing illness provided a reasonable excuse for an inability to file a tax return on time.

A taxpayer can appeal a late filing tax penalty when he is able to prove that he had a reasonable excuse for not doing what he was supposed to do. Once the reasonable excuse has ended the taxpayer should put things right (i.e. file a late tax return) without any unnecessary delay

  • The taxpayer’s 2010/11 self assessment return was due on 31 January 2012, if filed electronically. It was not filed until 7 August 2012; payment of the tax due followed this.
  • HMRC raised fixed and daily late filing penalties and late payment surcharges 
  • The taxpayer appealed out of time; HMRC recommended the appeals be resubmitted to the FTT

The First Tier Tribunal (FTT) agreed to hear the late appeals as HMRC had recommended they be made. It found that:

  • In 2009 the taxpayer had been diagnosed with anxiety and depression, which, it was argued, rendered him incapable of dealing properly with his financial affairs
  • HMRC contended that an ongoing condition meant the taxpayer was expected to make alternative arrangements to meet his filing obligations

The FTT held that the nature of the taxpayer’s condition was that it was sufficiently severe that was unable to make said alternative arrangements.

  • Thus his mental illness was a reasonable excuse for late filing and payment so no penalty was due.

Comments

It should be noted that at the start of his illness, the taxpayer received no help from his family; the Return and appeals were dealt with when his son started to help.

This is one of a number of recent cases where mental illness was argued as a reasonable excuse.