HMRC is harming taxpayers who have been financially abused

Fiona Fernie, Partner said:

In my experience, HMRC staff do not recognise that victims of financial abuse are vulnerable and do not treat them with compassion when making enquiries.

I had a client whose husband hid funds which were paid into their joint account and were legally his wife’s income. She was unaware that amounts which belonged to her had been received since she was not notified of the payments and her husband then removed the money from the account.

HMRC was aggressive towards my client who had ‘failed to notify’ them of the income. When asked to consider the suggestion that since she had not known about the income it was impossible for her to have notified HMRC and that therefore she had a reasonable excuse for not having done so, and despite being told she had attempted suicide due to the stress of the enquiry, HMRC still took months to come to a conclusion. That decision was that my client had no reasonable excuse for not declaring the income, despite the fact that she had no knowledge of it because her spouse had intentionally hidden it from her.

HMRC are now pursuing tax interest and penalties for a 20-year period; a bill that my client has insufficient money to pay. Their attitude to the suicide attempt was to tell my client to get an appointment to see a GP or ring the Samaritans. This is particularly dismissive in light of the known difficulty surrounding obtaining a GP’s appointment in the wake of the pandemic.

At no point did HMRC act with compassion or seem to believe that my client was genuinely vulnerable. The long delays in getting HMRC to respond and the need to keep badgering for an update added to my client’s distress (and costs).

We were not offered access to extra support despite HMRC’s website saying that they provide this for those with mental health conditions, like depression, stress or anxiety and those who are victims of domestic abuse, including financial abuse.

I have another client who is not a victim of financial abuse, but is vulnerable for other reasons. There has been a similar lack of understanding displayed by HMRC. There have been very long delays in reaching technical conclusions, despite being told that this was causing a devastating impact on my client’s mental health.

The financial implications are also horrific: a huge increase in my client’s bill because interest is running, but HMRC are saying that he could mitigate that by making payments on account. This is despite being told that until the tax bill is determined, there are legal restraints on his access to funds and there is no opportunity to make such payments.

HMRC must improve their staff and whole institution’s understanding of financial abuse and mental health conditions, so they can act with compassion and understanding, not further punish victims and those who are struggling.

Would you like to know more?

If you would like to discuss any of the above, please speak to your usual Blick Rothenberg contact or Fiona Fernie using the form below.