The stories came from a leaked memo to the HMRC staff who deal with self assessment penalties. HMRC charges a £100 automatic penalty if a self assessment tax return is not submitted by 31 January. You can appeal against the penalty if you have a ‘reasonable excuse’ – and HMRC provide a list of what they regard as reasonable. Top of the list is ‘your partner died shortly before the tax return or payment deadline’, which provides an indication of the extreme circumstances listed.
Despite the automatic penalty system, around 900,000 people failed to submit their tax return on time for the 2013/14 tax year, the deadline for which was 31 January 2015. Many of these individuals appealed against the subsequent £100 minimum penalty causing a backlog of cases in HMRC. The internal memo explained a simplified approach to resolving penalties with the effect that HMRC would accept the taxpayer’s grounds for appeal in the majority of cases, cancelling the penalty without questioning the taxpayer.
A subsequent press release from HMRC has made it clear that the deadline for appealing fines for the 2013/14 tax year has now passed.
It did not state what their approach would be to individuals missing the 2014/15 tax return deadline which is 31 January 2016.
The press release does say, in the longer term, HMRC want to move away from sending out penalty notices as a mechanical reaction to a single missed deadline. Instead they want to focus on those who persistently fail to pay or submit their tax returns on time.
It is good news, of course, that HMRC will use their right to send out fixed penalty notices in a fair and proportionate way, and focus their attentions on the more ‘persistent offenders’.
But it is far safer – and arguably much less hassle – to get your self-assessment tax return filed in time for the 31 January deadline.
Clayton & Brewill is a firm of chartered accountants with offices in Nottingham, Melton Mowbray and Long Eaton.