Effect of drop in income

The appellant had a gross annual income of more than £100 000 in the year ended 5 April 2009. In May he found out that his employer was having financial problems and by autumn he no longer had his job.

However he found new work albeit at a lower salary: 20% of his previous take-home pay. The drop in earnings became further complicated when his first child was born in September. The problem was exacerbated when he decided to go ahead with a £15 500 loft conversion to make a bedroom for his son.

When the taxpayer was reminded by his former employer’s accountant that he had yet to pay the balance of his outstanding tax for 2008/09 and that this was due by 31 January 2010 he decided to contact HMRC to ask for time to pay.

...