Readers' forum: The quality of mercy

My client’s wife had depression. To encourage her back to work he made her a director of a couple of companies but she did not participate or receive dividends. HMRC issued tax returns for 2009/10 and 2010/11. The returns were filed late penalties now exceed £1 200 and bailiffs threaten. Her doctor is concerned that any pressures that cause her serious anxiety could affect her mental wellbeing.

My client wants to sort out his wife’s tax problem but how? Should he ignore these letters? Would limitation eventually kick in? Should he file an appeal out of time? There is a good reason for a late appeal: HMRC’s letters were simply filed away because his wife had a medical condition. If a late appeal can be established could it be argued that there should be a proportionate relationship between tax and penalty so the latter...