Even Payment of Tax Can Be Tinged With Mercy
In a ruling that emphasises that mercy has a place even when it comes to payment of tax, a pensioner issued with swingeing tax assessments and penalties after the accountant he had always relied upon fell seriously ill and later died has been granted exceptional relief by the First-Tier Tribunal.
Due to his accountant’s serious illness, of which the pensioner was entirely unaware, his self-assessment tax returns in respect of two financial years had been submitted well beyond the ordinary deadline. That resulted in the imposition of penalties and tax assessments which exceeded the tax that he in fact owed.
In granting the pensioner special relief and reducing the sums demanded from him by Her Majesty’s Revenue and Customs (HMRC) by more than £5,000, the Tribunal accepted that his accountant had not told him of his terminal illness and that he had relied upon the accountant’s assurances that his tax affairs were being dealt with and that he had nothing to worry about.
HMRC had argued that the sums demanded were justified in that the pensioner had been sent eight penalty notices and warning letters and should have been well aware that his tax was in arrears. However the Tribunal accepted that the accountant’s death had come as a great shock to the pensioner who had had little formal education and had relied upon the accountant throughout his working life.
Whilst recognising that special relief under the Taxes Management Act 1970 is an ‘exceptional remedy’, the Tribunal found that the pensioner had engaged the accountant to act as his agent in a reasonable manner and that the demands placed upon him by HMRC were unreasonably excessive and unconscionable.