The FTT has rejected an appeal on non-declaration of rental income from a taxpayer who had been imprisoned, finding that a reasonable person would have appointed someone to look after their tax affairs.

The taxpayer bought three properties in 2000 and 2021, and rented them out. He did not declare the income to HMRC, so discovery assessments were raised when this came to light.

The taxpayer had been imprisoned from 2002 to 2012. He claimed that he had not had time to discover what the tax position was with the rental properties before he was sent to prison, and that any failures while he was in prison were the responsibility of his agent, as he could not conduct business from prison.

The taxpayer had been imprisoned from 2002 to 2012. He claimed that he had not had time to discover what the tax position was with the rental properties before he was sent to prison, and that any failures while he was in prison were the responsibility of his agent, as he could not conduct business from prison.

The FTT upheld the assessments and penalties. The agent was just an estate agent asked to look after the properties, he was not responsible for tax compliance and there was no evidence that he had been asked to be responsible for it. A reasonable person with three rental properties would have appointed someone to look after their tax affairs, and taken some action between their release in 2012 and the HMRC investigation in 2020. The taxpayer’s argument that he should not be liable to tax on income accrued while he was imprisoned was dismissed.