Prioritising prompt payment of your tax bills can be tough, particularly when there are other compelling and unforeseen demands on your limited resources. In a case on point, the First-tier Tribunal (FTT) came to the aid of a man who dipped into his tax reserve to pay for his elderly mother’s care after she suffered a stroke.

After his mother fell ill, the man had to move to be closer to her. She had insufficient income to pay all of her nursing home fees so, with no support from his siblings, he stepped in to top them up. At around the same time, he lost his job as a consultant and subsequently had to take lower-paid work as a delivery driver. His daughter was facing a criminal investigation and that, combined with other family difficulties, had plunged him into depression. In order to pay for his mother’s care, he resorted to money that he had sensibly set aside to pay tax.

After his payment of more than £8,000 in tax and National Insurance Contributions was delayed, HM Revenue and Customs (HMRC) levied late payment penalties totalling 15 per cent of the tax due. He said that he had tried to contact HMRC several times to discuss payment arrangements but was not called back. He had been visited by bailiffs and threatened with bankruptcy.

In upholding his appeal against the penalties, the FTT noted that he had been struck by a series of traumatic and unforeseeable life events which had impacted on his mental health. The fact that he had set aside funds to cover his tax bills indicated that he was a responsible taxpayer.

Prior to losing his job, he reasonably believed that he would be able to replenish the tax reserve and his decision to use it to fund his mother’s care was understandable. There was a lot on his plate; he was anxious to do the right thing and any taxpayer in his position would probably have done the same thing. He was now in a position to discharge all his tax liabilities and, overall, the FTT found that he had a reasonable excuse for late payment.


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