Court rules that life cannot get in the way of a tax bill

10 July 2024

Rachel Reeves has a few pieces of unfinished business to pick up from her predecessor and one will be whether to continue with planned reforms to the high income child benefit charge. Whilst the thresholds have moved up following the last budget, the fundamental flaws of the system remain. Now, a couple with equal earnings totalling £120,000 can claim child benefit in full, whereas a household where one of them earns £80,000 receives no child benefit at all.

The rules continue to trip up taxpayers and for the five years to 5 April 2023, 935 cases have been appealed to the First-tier Tribunal (FTT), often with relatively trivial amounts of tax at stake. The latest in a long line of such cases is Aaron Treliving v HMRC.

In this case, the taxpayer Mr Treliving sought to make a late appeal against income tax assessments and associated penalties relating to the tax years between 2014/15 and 2019/20. Whilst Mr Treliving had notified HMRC of his wish to appeal, this was over nine months late. HMRC did not accept the out of time appeal but they themselves did not inform the taxpayer of this until nearly 17 months had passed. 

Mr Treliving then sought to bring an appeal before the FTT but the first step is that a taxpayer must notify an appeal to HMRC within 30 days of the notice assessing them. An appeal may be given late to HMRC provided various conditions are met, including that the taxpayer had a reasonable excuse for not appealing in time.

The case considered three potential excuses offered by the taxpayer:

  1. He had not received the correspondence informing him of the requirement to appeal within 30 days;
  2. His wife was pregnant with their third child and the pregnancy was high-risk and difficult.
  3. Life got in the way.

In order to be considered a reasonable excuse, the judge noted that it must be one that 'might be expected to cause anyone in the same position…as justifying a failure to bring an appeal'.

It was determined that Mr Treliving was aware of the 30-day appeal requirement due to the various correspondence he had received. It was considered that his wife’s pregnancy may have provided a reasonable excuse until their child was born but that provided no excuse for the delay after this date. That left the only remaining excuse for consideration as life getting in the way.

Any parent of three young children is likely to sympathise that life can indeed get in the way of many daily tasks. However, the court found it was not 'objectively reasonable to ignore or fail to give proper attention to one’s tax obligations because life gets in the way'. A parent might get short shrift from their partner if they used that excuse to delay a household job for months on end, so it’s no surprise that HMRC will not accept it either.