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Daily filing penalties

We have three relative new clients who have been hit with Daily filing penalties for non compliance of submitting there tax return form.

None of them can afford them really and circumstances have led them to be late.

I wondering what others views on these are and are they worth appealing.

Thanks

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Reasonable excuse

If they have a "reasonable excuse" as deemed by HMRC then you should have a good chance of appealing them.

On the other hand, if the client had no tax due you can play the old arguement that the penalties cannot exceed the tax due. HMRC have changed the rules now so this isn't the case, however about 70% of the time we get a letter saying that it isn't a reasonable excuse but a statement cancelling the penalty. I keep checking but so far no penalties have been added back!!

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What are the circumstances?

Rather difficult to give an opinion otherwise

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Really twj??

So just an appeal saying they were ill/pregnant/divorcing/lazy in the Jan 2012 period and you got a not-valid-but-we'll-let-em-off response??

Totally against their rules but I may look afresh at a number of our penalties for this sin.

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My thoughts exactly MM

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Circumstances?

I'd like to know what the reasons were as well.

They should have nearly 10 months to file. How long do they need?

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My point is this should have filed yes, but didn't therefore if I can a reason to get these reduced or cancelled within the legislation we would as we act for the client not HMRC.

To be clear these are all daily penalties charged since 1st May 2012.

Has anyone challenged these and won? I appreciate it is early days

All three cases have very little tax due, two of them NIL tax and one due a repayment.

Any further thoughts would be welcome - thanks

 

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Reasons

"All three cases have very little tax due, two of them NIL tax and one due a repayment."

I suppose a negative amount is very little but it's a strange thing to say.

Is that the only reason you can give? That there was no tax due?

twj4789 says that he has been able to get penalties cancelled on that basis so why not try?

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The tribunals

have a backlog of 38 years?

So I am inclined to think (and have seen) that many "that's not fair claims" will succeed.

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my experience

I've had good experiences so far this year in appealing similar late self assessment filing penalties, reasonable excuses have ranged from divorce/domestic dispuite restricting access to records to computer failure.

Best to try an appeal with all 3 clients

Tim Charles

www.charlesaccountancy.com

 

 

 

 

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Courts

The courts have considered that reasonable excuse is less onerous than HMRCs interpretation. This is why HMRC have changed their attitude.

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Appeals

Are you providing a free appeal service?

I admit I am not very sympathetic towards overdue returns, especially when we have wasted lots of time reminding clients that their returns were due, and are now overdue.

We have about 3 clients that still have overdue returns, but these clients only appear at our offices every few years. I hoped that the new penalty regime would kick start them into getting their records in. It seems not :(

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Late tax returns

First we need to establish whose fault it was that the tax returns WERE submitted late. If they were clients of yours before the deadline, I can see only 3 reasons for this. 1. The clients did not submit the paperwork to you in time. 2. You did not process their paperwork in time. 3. Your procedure is similar to mine; no accounts are filed until fees are paid in full, and 5 days are allowed for cheques to clear.

Alternatively it may be that they approached you only after they had received their first fine. Your phrase of 'three relative new clients' would seem to suggest this. Also 'non compliance of submitting there tax form'.  With no information on the exact circumstances for the delay, I can only state, If they have reasonable excuses, this may work.

This would leave only one further comment, out of all the accountants, why did 3 late filers choose you? Unless you specifically offer this service.

 

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To close this matter - none our fault

Client 1 - Existing client. Fees owed. No instructions received HMRC chasing debt. They had financial difficulties and could not afford to pay me or anyone else, so left things. 

Client 2 - Old client as no longer needed an accountant. Set up in business and failed. No funds to pay an accountant, now on a more stable income stream and involved new business venture, and needs to tidy up things.

Client 3 - new client - tax returns outstanding

Hugh I would say we do a lot of this type of work as a small practice with 20+ years experience and people trust us to find a solution for them.

Whilst I think the penalties are unfair, we can not find a genuine reason for appeal so at this stage will not be appealing.

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We are not to judge

If there is no reasonable excuse and no chance HMRC would accept an appeal, it is best to advise the client accordingly. However, whether or not we sympathise with a client's failings it is our duty to represent them in getting the best outcome we can, if there is any room for manoeuvre.

My firm deals with a number of clients who turn up with accounts and tax returns outstanding, and quite often with income they haven't declared and want to come clean about. Sometimes HMRC have caught them first. It is our job to represent them the best way we can as long as we are satisfied they are being honest with us, and that means getting them the best deal with HMRC.

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Agreed

Jon - totally agree that sums it up for me !

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Could any of them be said to be

outside the scope of SA?

On the face of it:

1) No

2) Possibly

3) Probably not, but ???

If they should not have been in SA you may have some joy - others seem to have been successful. Otherwise throw yourself to the mercy of the FTT, but that seems to give polar opposite results in apparently similar cases depending on who hears the case.

Have a read through some of the cases HERE filtering to Catagory 23 IT/CT and sub category 23.17 Penalty

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