There has been much publicity in the press recently regarding HMRC waiving the £100 late filing penalty for taxpayers who have submitted their Self Assessment tax returns late – so what does this mean for your clients.
Where a taxpayer submits their Self Assessment tax return late, HMRC automatically impose a penalty. For the year ended 5 April 2011 (tax year 2010/11) onwards this has been a fixed amount of £100. Previously, it was possible for the penalty to be limited to the amount of the tax liability, where this was less than £100.
The taxpayer has always has the right to appeal against the penalty where they consider that they have a ‘reasonable excuse’. HMRC consider a reasonable excuse to be something unexpected or outside the taxpayer’s control and gives examples such as a partner dying, computer or software failure, fire or unexpected postal delays all close to the filing deadline.
It has been reported that HMRC have a backlog of nearly a million letters where taxpayers are claiming that they had a reasonable excuse for not submitting their tax return on time and that the penalty should be cancelled as a consequence of that reasonable excuse.
HMRC stated in a document leaked to the Daily Telegraph that ‘our penalty regime is intended to influence customer behaviour, but also be a clear and cost effective, fair and proportionate’.
HMRC have stated that the current way of managing penalties does not meet these objectives and a more proportionate approach is being taken whereby ‘in the vast majority of cases [HMRC] will be accepting the customer’s grounds for appeal and cancel the penalty.’
The purpose of doing this will be to free up sTaff from dealing with low value appeal letters for the £100 penalty and allow them instead to concentrate on compliance and enquiry work.
If you have submitted an appeal against a late filing penalty you should get some good news. Gabelle specialise in assisting clients and their advisors with all types of penalties and can provide expert advice on how to reduce or minimise the penalty, in some cases to nil.
Please call TaxDesk on 0845 4900 509 to speak to John Hood.