I understand that just under 900,000 people missed the most recent income tax filing deadline of 31 January 2015. HMRC have announced that it is too costly to investigate reasons for missing Self-Assessment deadlines and that the \u00a3100 fine should therefore be cancelled if a reasonable excuse is given for cases under appeal. \u00a0HMRC have indicated that this move is to allow them to focus more of their resources on tax avoidance and evasion rather than penalising large numbers of \u201cordinary people who are trying to do the right thing\u201d.<\/p>\n
HMRC then go on to point out that this is \u201cpart of our planned, proportionate approach to penalty appeals, particularly for small businesses and individuals\u201d.\u00a0 Going forward HMRC intend to amend their systems so that they will be able to track patterns of behaviour and focus on those who persistently fail to pay or send their tax returns on time.<\/p>\n
According to The Daily Telegraph, those people who fail to file their tax returns on time will escape a fine providing they have a reasonable excuse for being late which shows mitigating circumstances.\u00a0 There is suggestion that a reasonable excuse is one which is outside the control of the taxpayer and which stops them meeting a tax obligation.\u00a0 It is reasonable to assume that these excuses would include death of a loved one, an unexpected medical condition or a fire.<\/p>\n
This announcement is welcome. A recent article in the tax professional press re-enforces the frustrations that tax practitioners face when dealing with the Revenue administrative machinery.\u00a0 In the case the article covered HMRC were seeking to penalise a community amateur sports club with a penalty of \u00a31,278 and were not willing to back down. At the last minute they finally acknowledged that the club\u2019s advice had been correct and the penalty was invalid.\u00a0 This was 3 days before a case management hearing.<\/p>\n
I have also had the experience of HMRC\u2019s bureaucracy machine being unwilling to back down.\u00a0 My client\u2019s affairs were always up-to-date and he did not owe any tax.\u00a0 Due to a computer failing HMRC\u2019s computer repaid almost \u00a34k to my client which was not due to him.\u00a0 He immediately, and voluntarily, repaid it.\u00a0 This led to the Revenue issuing penalties and interest on the taxpayer.\u00a0 Initially HMRC would not back down about those charges.\u00a0 After many months and different individuals at HMRC being involved, they accepted their error and revoked all but a small part of the penalty.\u00a0 Even while the matters were under discussion, HMRC\u2019s computer automatically referred the disputed sum to external debt collectors.\u00a0 HMRC informed us that this was standard practice and also informed us that they could not dis-instruct the debt collectors until such time as the Revenue\u2019s computer showed the amounts being paid or waived.\u00a0 We finally got the agreement of all amounts to be waived with the exception of a very small sum which would have to be argued with a different team.\u00a0 That small sum was paid.\u00a0 This was not because it was necessarily due but rather to close the case.\u00a0 You can imagine that it was stressful for the client and a waste of both mine and HMRC\u2019s time.<\/p>\n
One would like to think that HMRC\u2019s review of the automatic penalty regime would be expanded into other penalty provisions to help prevent the repeat of cases like those above. However given the importance of patterns of behaviour I shall still be encouraging my clients to meet all their deadlines.<\/p>\n","protected":false},"excerpt":{"rendered":"
I understand that just under 900,000 people missed the most recent income tax filing deadline of 31 January 2015. HMRC have announced that it is too costly to investigate reasons for missing Self-Assessment deadlines and that the \u00a3100 fine should therefore be cancelled if a reasonable excuse is given for cases under appeal. \u00a0HMRC have[…] <\/p>\n