Can mental health be used as a reasonable excuse?
Where errors are identified in a taxpayer’s affairs, HMRC will, in most cases, seek to impose penalties unless that taxpayer has a reasonable excuse for those errors. HMRC guidance describes a reasonable excuse as “something that stopped you meeting a tax obligation that you took reasonable care to meet”. The guidance also goes on to list some examples which HMRC would constitute a valid reasonable excuse. While this list does not specifically mention mental health, one example given is “a serious or life-threatening illness”.
Clearly, illness relating to mental health can both be serious and life threatening, and HMRC should consider mental health as a potential reasonable excuse in the right circumstances.
As with all penalty mitigation discussions, timing is a key consideration and evidencing a period of any mental health issue is crucial. A reasonable excuse argument would only apply for the period in which the taxpayer’s mental health directly impacted their ability to deal, or failure to deal, with a particular tax matter.
Due to the stigma still associated to mental health, and as individuals don’t always seek help when struggling with mental health issues, it can at times be challenging to evidence a reasonable excuse argument on mental health grounds. Often, HMRC will require written confirmation of the condition and how it affected the taxpayers’ ability to comply, or failure to comply, with their tax obligations from a doctor or suitably qualified mental health professional. Therefore, where such evidence is not available, it’s even more crucial that specialist representation is sought.