Sad circumstances

Error on income tax return

The taxpayer surrendered a life policy in 2012/13. She forgot to include the gain in her tax return although she had put money aside to pay the liability. She said the reason for the omission was that her husband had unexpectedly died and she had to take over his business. Further she had not received a letter from the insurer telling her about the amount to report on her return. When HMRC told her the tax due she paid it saying she had been remiss but it was ‘it was a genuine mistake’.

HMRC imposed a penalty for the error on the basis that she had made a prompted error due to carelessness. The taxpayer appealed. She said she was ‘a prudent and reasonable taxpayer’ and felt she was ‘in the position of David against Goliath’. She said there was a ‘lack...