HMRC create another FINE mess with a delay in issuing late filing penalty notices.

Penalty notices for the late filing of Self-Assessment tax returns online are normally issued by HMRC in February, soon after the 31st January filing deadline. However, for 2018 tax returns that were due to be delivered to the Revenue by 31st January 2019, notices will not be sent out until the end of April - and it’s all because of Brexit apparently.

HMRC blames Brexit for running late

As part of EU Exit contingency planning, HMRC has taken the decision to 'make a change' to the timings for issuing notification of Self-Assessment penalty notices. This is because when individuals receive a notice, many contact HMRC to consider their options. This, in turn, creates considerable demand for those working in HMRC call centres and back offices.

HMRC expects there to be an increased demand in their call centres as the UK departs the EU (if it ever happens!), and so they have taken the decision to delay issuing penalty notices to ensure they can provide the best service to taxpayers. This will release those staff for Brexit related work.

Although notices will be delayed by several months, those who missed the filing deadline - around 700,00 - will not escape the £100 penalty unless, of course, they have a reasonable excuse for filing their tax return late.

Brexit is a convenient excuse for many to use nowadays when things go wrong, but the fact is that HMRC has known about the UK’s official date for leaving of 29th March 2019 for nigh on two years. So if our leaving the EU is the real reason for HMRC’s decision, then the department has failed to put in place the necessary contingency plans to deal with (what should have been, at least) an anticipated gush of enquiries.

Tax return backlog could cause late-payment charges

It is understood that HMRC has been months behind in processing the 2018 paper tax returns which had to be filed by 31st October 2018. Indeed, according to reports, they hadn’t even opened the envelopes housing the returns until very recently! Whatever the reason for this decision, it’s not good enough because taxpayers are expected to ensure that they abide by HMRC deadlines or suffer the consequences.

Despite this delay, it is reasonable to assume that the majority of the 700,000 late filers should be expecting a penalty notice; when filing online, a taxpayer is issued with an FBI (‘File by Internet’) receipt that confirms the date and time of filing. However, there may be some individuals who are unaware that their tax return has not been received by HMRC because of technical problems, whereby the return is held in suspension and doesn’t proceed to the submission stage. For those people, they are going to get a nasty surprise sometime in early May when the penalty notice lands on their doormat - HMRC has said that the notices will be posted on 30th April and so it will take several days before the person receives it. By that time, £10 daily penalties for a return more than 3 months late may also have kicked in.

It is unclear whether the late filing penalty will show up on an individual’s Personal Tax Account (PTA) but for those that are in doubt about their situation, then this should be viewed without delay.

Even if a person is handed a penalty notice they do have a right of appeal, provided they can satisfy HMRC that they have a reasonable excuse for filing their tax return late.

What counts as a reasonable excuse?

A reasonable excuse is something that stopped a person meeting a tax obligation that they took reasonable care to meet, for example:

  • A partner or another close relative died shortly before the tax return deadline.
  • The person had an unexpected stay in hospital that prevented them from dealing with their tax affairs.
  • The person had a serious or life-threatening illness.
  • The person’s computer or software failed just before they were preparing their online return.
  • Service issues with HMRC online services.
  • A fire, flood or theft prevented the person from completing their tax return.
  • Unpredicted postal delays.
  • Delays related to a person’s disability.

What won’t cut it as a reasonable excuse?

HMRC won’t accept the following as a reasonable excuse:

  • The person relied on someone else to send their tax return and they didn’t. However, if this was a negligent agent, then the individual could make a claim against them.
  • The person found the HMRC online system too difficult to use.
  • The person didn’t receive a reminder to file their return from HMRC.
  • The person made a mistake on their tax return.

Failing any of the above, then blame Brexit!

For more information, visit our knowledge hub where you’ll find helpful articles on everything from contractor guides to IR35 news.

Leave a Reply

Sorry, you must be logged in to post a comment.