Was incarceration reasonable excuse?
Herrmann v HMRC. Mr Herrmann (H) failed to disclose property income to HMRC. After an enquiry, assessments and penalties were raised for 14 tax years. H appealed, in particular raising an objection to a period of time covered when he was in prison, as he was prohibited from running a business.
Law. There is no exemption from income tax for prison inmates. H remained entitled to the income throughout this period, and had appointed an estate agent to deal with the properties. The only point to consider was whether he had a reasonable excuse for the non-compliance.
Decision. The judge noted that the obligation to notify a tax liability fell on the taxpayer. It was not for HMRC to find people who weren’t complying. The agent that had been appointed was not a tax advisor, and had not been engaged to provide tax advice. It would not have been possible for HMRC to write to the estate agent, and the claim for a reasonable excuse was dismissed.
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