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As HMRC’s consultation ‘Incapacitated person – a modern definition’, draws to a close, LITRG reports on its success in stimulating debate and hopes that the Government acts on the responses.

‘Incapacitated person’ consultation

Pressure from LITRG over a number of years resulted in the publication of this consultation at the end of May.

As LITRG hoped, what began as a consultation to review offensive language hidden away in the volumes of tax legislation has sparked wider considerations of how HMRC deal with incapacitated persons.

LITRG’s response

Our response (link below) comments that specific provision in tax law may not in fact be needed at all, given the general laws of incapacity and representation already in place. These are arguably sufficient to allow someone to deal with HMRC on the incapacitated person’s behalf, as long as HMRC’s systems recognise the various forms of legal ‘representative’.

If, however, separate rules for tax are thought to be essential, then the Government must find a way to remove the current offensive definition of ‘incapacitated person’ which includes language such as “person of unsound mind”, “lunatic”, “idiot” and “insane person”. We have suggested that this could be done by focusing not on the specific nature of a person’s incapacity, but rather on whether there is a formally-appointed representative in place to help them.

But what then of those who experience problems, such as post-traumatic stress or other temporary or fluctuating states, which cause them to miss a deadline for filing a return or paying tax? They may not have a formal representative in place but nonetheless need assistance in dealing with their tax affairs. We believe that HMRC’s duties under the Equality Act require them to do more than simply leave it up to the taxpayer to appeal on grounds of reasonable excuse once penalties have been imposed. Surely prevention of problems is better (and indeed more cost-effective) than curing them afterwards?

Here, we suggest there are close links with HMRC’s Agent Strategy, the subject of separate consultation. This must address how HMRC work with ‘friends and family’ helpers or, say, social workers, where there is not a formal representative to take up the reins.

Now it’s time for action

In summary, we hope that HMRC and the Government will take on board the responses to this consultation, in relation to both the specific issue of the wording of the law and the wider context of bringing HMRC’s handling of disability, including mental health, into the modern world.

Useful links

The consultation document, on the HMRC website
LITRG’s full response to the consultation