In many cases HM Revenue & Customs ("HMRC") do not recognise mental health problems, say Fiona Fernie, partner, and Jessica McLellan, director, in Blick Rothenberg's tax risk and dispute resolution team.
Tax can be extremely taxing for people who suffer from mental health problems, whether it be filling in a simple return or trying to explain why they have not complied with their tax obligations.
'Tax needn’t be taxing, is the famous quote from HMRC,' said Fiona. 'But the UK’s self assessment system and interaction with HMRC can be complex for various reasons - including the fact that most taxpayers have no specific point of contact in HMRC and lengthy help line waiting times. For those with mental health issues, this can easily turn into a difficult situation to deal with, and at the start of Mental Health Awareness Week it is extremely important that these issues are not ignored.'
She explained, 'In many tax cases, the issues caused by mental health problems are not properly recognised and HMRC needs to demonstrate greater understanding.'
In recent years, HMRC have become more aware of mental health problems when deciding what constitutes a reasonable excuse for filing late or making a late payment with positive movement towards recognising that illness can be physical or mental. However, for HMRC caseworkers, mental health issues are hard to identify unless they are specifically informed about them.
Fiona continued, 'For some taxpayers, being under enquiry can result in the exacerbation of mental health conditions. Explaining this to the HMRC officer undertaking the enquiry is important. This can result in extra time to comply with information requests and impact HMRC’s decisions regarding penalties although this will not mean that HMRC withdraws from an enquiry if they feel they require further explanation or that there is a real risk of unpaid tax.'
She added, 'Indeed in a serious enquiry situation many HMRC officers won’t even consider whether a taxpayer with mental health problems has a reasonable excuse for failing in their obligations to file tax returns or provide information to HMRC without a specialist doctor’s report.'
Jessica McLellan said, 'In our experience, once an HMRC caseworker is aware that someone is a vulnerable taxpayer their approach is far more understanding. Unfortunately, there is a large gap between being “lost in the system” and gaining that understanding.'
Jessica continued, 'They often only see that someone isn’t complying with their tax obligations rather than the underlying cause. Sadly, once a problem arises with HMRC, it can be exacerbated by the individual’s difficulty in articulating that they have a mental health condition, which is so substantial and long-term that it affects their ability to function day-to-day and to cope with reporting and payment obligations. Also, many are reluctant to come forward because of the stigma that is still attached to mental health issues.'
Jessica added, 'For this reason, taxpayers with mental health conditions often end up with escalating correspondence from HMRC chasing tax debts, penalties and threatening legal action.
HMRC have clearly stated that they want to support those with mental health conditions as much as they can. In fact, as a government agency, they have a legal duty under the Equality Act 2010 to provide “reasonable adjustments” to those with disabilities. This means assisting taxpayers to use HMRC services and offering extra support where needed. There is also an HMRC Needs Extra Support service to which vulnerable taxpayers can ask to speak – a team trained to spend extra time dealing with issues and who can also liaise with other parts of HMRC on a taxpayer’s behalf.'
Jessica added, 'Once they are aware there is an issue, HMRC can note the need for extra support on a tax record. This is more likely to lead to someone at HMRC taking ownership to help sort an issue out.'
For more information, please contact either Fiona Fernie, or Jessica McLellan.