The Taxes Management Act 1970 (TMA), the main statute dealing with tax administration and compliance, defines an ‘incapacitated person’ – ie one who is unable to deal with their tax affairs except through a representative – using the words ‘lunatic, idiot or insane person’. The definition also covers children.
It further provides that an ‘incapacitated person’s’ tax obligations may be discharged by their ‘trustee, guardian, tutor, curator or committee’.
During proceedings on the Finance Bill, the Opposition Treasury spokesman, Chris Leslie MP, tabled a new clause drafted by LITRG that would have modernised the definition in the TMA by linking it to the Mental Incapacity Act 2005. While the Government declined to accept the clause as drafted, the Minister agreed that change was needed and instructed his officials to begin discussions.
At the Report stage of the Bill, the matter was again debated and the Minister committed the Government to changing the current definition, and was confident that the work could be done ‘in a carefully considered way’ within one to two years.
There now begins a process of consultation with officials and interested bodies to look at the definition, which will have implications for those representing ‘incapacitated persons’ in their dealings with the tax system. LITRG would be interested to hear from anyone with views on the matter.
LITRG’s original recommendation was contained in our report Disability in tax and related benefits (December 2003).
Contact: Robin Williamson/Jan Tish (Tel: 0844 579 6700 Fax 0844 579 6701)