Man’s ‘Debilitating Fear’ of Filing a Tax Return Not a Reasonable Excuse

There is such a thing as a reasonable excuse for failing to file your self-assessment tax return. However, in an unusual case, the First-tier Tribunal (FTT) ruled that a businessman’s alleged debilitating fear of making a mistake in his return did not qualify as such.

The man’s tax affairs had in the past been the subject of a criminal investigation by HM Revenue and Customs (HMRC). He had been interviewed under caution but, in the event, had not been prosecuted. He nevertheless took the view that HMRC had waged an aggressive campaign against him.

He said that his mental health had suffered to the extent that he moved abroad so that he would not have to deal with HMRC again. He also asserted that his upbringing in the Catholic part of Belfast during the Troubles had left him with an extreme distrust of the British state.

HMRC raised a £10,664 penalty against him after he failed to file a tax return for the year ended 5 April 2015. Challenging that bill before the FTT, he argued that he had a reasonable excuse for his failure in the form of a debilitating fear that even a slight mistake in preparing his return would expose him to further investigation and, potentially, prosecution.

Dismissing his appeal, the FTT noted that undergoing a criminal investigation would be a stressful experience for any taxpayer. It accepted that mental health difficulties may in some cases give rise to a reasonable excuse. However, it had considerable reservations about the reliability of the man’s testimony.

The FTT saw no evidence of bullying, intimidation or impropriety in HMRC’s dealings with him. His assertion that he was fearful that any mistake in his return might be seized upon by HMRC to launch a criminal prosecution was fanciful. There was no medical evidence that he was suffering from post-traumatic stress disorder or any other form of mental ill health. He was a professional man with extensive business experience and the forceful and assertive manner in which he gave his evidence did not indicate that he was a timid personality.