TaxAid, the charity which provides tax help to those on low incomes, is engaging in a study of how people with mental health problems are treated by the tax authority. If you have any experience of this, TaxAid would be very grateful to hear from you. Here, David Brodie explains the background.

Did you know that HMRC Debt Management has published its procedures [1]for waiving recovery of tax credit overpayments where the claimant suffers from a mental health problem, and waiver is necessary to prevent “any detrimental effect or unreasonable distress”?

This welcome development forms part of a wider drive by HMRC to tackle its obligations under the Disability Discrimination Act (DDA), which requires government departments to make appropriate adjustments to address the special needs of people with disabilities, including those suffering from mental illness.

According to the mental health charity Mind, one person in every four suffers from mental illness at some point in their life, and so almost every tax practice will have clients who are affected. Such individuals may suffer from depression which makes them feel unmotivated or exhausted, making it difficult for them to manage paperwork or read coding notices, or they may have panic attacks triggered by official forms or having to telephone someone in a position of authority. They may also suffer conditions which can lead to self-harm.

Many years ago local tax inspectors had discretion to treat such individuals informally, so they might disregard the failure to file a return where there was clearly no loss to the Exchequer. However, such flexibility is less compatible with the modern HMRC, which relies upon standardised computerised processes and reduced personal contact. Nowadays, a person suffering from a serious mental illness may (without malicious intent) be unfairly pursued right to the courts.

HMRC is now working hard to address such inequities, and the new relaxation on tax credit overpayments is an early result, but it needs to understand better what other changes are required, and so it has commissioned Mind – supported by TaxAid – to conduct an independent study.

You can help

A key element of the project is to gather views on the sort of service that is wanted by professionals who support those suffering from mental illness. Many tax practitioners fulfill this role, helping clients as well as friends and members of their own families.

Mind has produced a questionnaire seeking your views. It takes 5 – 10 minutes to complete and by completing this form you could help make a real difference. If you are wiling to help, please add your comments here. [2]

From TaxAid’s casework

Heather is 63 and receives a tiny income as a music teacher and a basic state pension. Ten years ago she felt affronted by a local tax official and since then has flatly refused to complete tax returns. In consequence, HMRC raised determinations and was pursuing her for tax, interest and daily penalties exceeding £10,000. The matter eventually reached the County Court, where Heather asserted that HMRC officers were physically persecuting her and seeking to line their own pockets. The judge adjourned the case, advising her to contact TaxAid.

Heather was difficult to help, as she had no records and refused to discuss how we might establish her income. While it appeared from her lifestlyle that her income had always been less than her personal allowance, but the service office could not take a broad view and the recovery officer insisted on payment of the legal debt.

In the end we lodged a complaint, asking for a home visit by more senior officers who quickly ascertained that the case should be dropped and applied HMRC’s care and management powers for the entire debt to be cancelled. However, were it not for the judge’s intervention, and TaxAid’s help, Heather could have been pursued to bankruptcy.