Tribunal – Inability to pay is not a reasonable excuse
A recent case reinforces the strict way that HMRC pursue debts.
They had issued a surcharge notice to a taxpayer on 13 August 2009 for £294.09. The surcharge related to an assessment of income tax due for the year ended 5 April 2007 which was due to be paid on or before 18 June 2009. The taxpayer in this case made a written appeal to HMRC against the surcharge saying that he had sold a business, spent all the proceeds of sale and ‘had no money left to pay the unexpected tax bill’.
HMRC conducted an internal review and upheld its original decision. The taxpayer appealed to the Tribunal on much the same basis as his original appeal although added that he was blaming his accountants and his own ignorance for the issue. He stated that he will ‘pay his tax bill at some time in the future’.
The Tribunal noted that the tax amendment which gave rise to the assessment in question arose from correspondence sent to HMRC and that the tax had been correctly computed.
The Tribunal were not moved by the taxpayer’s pleas and found that there was no reasonable excuse which would allow the taxpayer to have the surcharge removed. An ‘inability to pay’ is specifically excluded as a reasonable excuse for not making payments due to HMRC. The Tribunal also reminded the taxpayer that he had ‘ultimate responsibility’ to ensure that his personal tax return was completed correctly.