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Art or Artifice? Reasonable Excuse & the Non-payment of Tax

Author

Andy Wood

Andy is a practical, creative tax adviser who assists a variety of clients in achieving their personal and commercial objectives in the most tax efficient manner.

January not only marks the start of the New Year but, for many people, a fresh start – a chance to make changes to their private and professional lives.

However, for millions of people across the UK, it’s a time of stress as they make an annual attempt to finalise their paperwork from the previous year.

The end of this month sees the usual rush to meet the self-assessment deadline and avoid incurring penalties for failing to provide HMRC with details of one’s tax affairs over the course of the previous financial year.

Only last week, the Revenue revealed that just over half of the more than 11.5 million tax returns expected for 2017-18 had been submitted.

Failing to pay tax and / or meeting one’s tax obligations is, of course, a serious matter. Depending on the circumstances and the actions of the taxpayer, the sanctions will vary widely depending on whether it is a simple mistake all the way through to tax evasion.

Certainly, where behaviour is more in line with the former then, where the taxpayer has a reasonable excuse, any penalties will be reduced wholly or in part.

As such, some people can come up with elaborate arguments as to why they should avoid these sanctions.

My mind was drawn to the topic by a news story about the New York-based art dealer Mary Boone, who is due to be sentenced later this month in the US after pleading guilty to two charges of tax fraud.

Her lawyers are attempting to avoid the prospect of her having to serve a jail term by arguing that childhood trauma and a previous history of substance abuse were to blame for her falsely claiming £1.25 million in personal expenses as tax-deductible business outgoings.

Whilst not wishing to cast judgement on the merits of her claim, it caused me to think of some of the more creative reasons employed by men and women trying to prevent HMRC levying fines for an absence of their tax returns.

Last year, the Revenue published a list of the more unusual and outlandish excuses which they had been given.

They included one man who blamed his wife’s not letting him into the marital home because she’d been seeing aliens and another who suggested that vertigo meant that he couldn’t climb his stairs to retrieve his tax return from where it had been left by his partner (read more…)

An attempt to persuade HMRC that eating sausage and chips for 250 days in succession was a legitimate business expense also received short shrift.

That’s not to say that HMRC sternly refuses to accept that there are indeed circumstances in which filing a tax return on time is not possible.

It has given examples of what it views as “reasonable excuses“, a list which features serious personal illness, family bereavement, computer failure, fire and theft.

Mistakes, bounced cheques and reliance on others to do the paperwork for you are not tolerated, though.

Whether people try to pass the buck for non-compliance on extra-curricular or extra-terrestrial activity, the outcome is usually the same: HMRC sees through the ruse and gets its cash in the end.

For more info on any of the topics raised above, please contact our helpful tax advice team, alternatively you can read more about personal tax matters below.

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