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I have sympathy for HMRC
There will always be a hard core of people who don't face up to their responsibilities unless pushed into it. While there will always be genuine reasons for not submitting a return within the deadlines, most people get 9 months in which to comply.
It costs time and money to keep chasing these people and it is time and money that could be better spent elsewhere. HMRC is such a dinosaur it will probably cost the taxpayers more than £100 to actually get each penalty paid!
Inconsistency
Amazing that HMRC can issue these notices within a couple of weeks of the deadline (quite correctly) but are unable/unwilling to send out penalty notices for non-submission of P35s until the penalty has quadrupled.
It behoves all of us to appeal each and every one of these £400 penalties as a matter of principle and challenge HMRC's contempt of Geraint Jones' decision in the FTT.
Penalty Numbers.
The real reason there is so many penalties is that there are too many people being taxed. If the Government was dramatically shrunk so nobody need pay tax until they earned, say, £100,000, then there would be considerably less people penalised, considerably less work making it easier to follow-up those that should be paying, and life would be a lot simpler for nearly everyone. Wouldn't help the accountancy profession though, so perhaps be happy with the status quo, eh?
I don't understand why people would rather pay fines
We all have those clients who wait till the last minute, despite our endeavours to encourage and educate. I have one client who only sent me his paperwork after a huge fine from Companies House. I have repeatedly nagged about getting the next lot from him, but I doubt I will before the next Penalty Notice drops on his mat.
I know a lot of clients who are fearful of paperwork and think they have better things to do! But I thought that's why they paid us!
Those getting fined largely seem to accept it, so maybe HMRC should double the fines and increase tax revenue without too much expense!
not high enough
£100 isn't enough. Its costs nearly that to fill my car up!
If they want them all in by 31st Jan then I am afraid they need to make it £250 or £500, and even then someone on £200K may not be very worried.
Should be higher!
My method is to add 25% to bills for SA clients after 15 Nov, and 50% after 25 Dec. The result of this is they all suddenly turn up. I have not had to add 50% to anyone's bills, and added 25% to 4 clients.
All 4 said "You are doing the right thing, it's fair enough!" or words to that effect. So overall a bigger fine would motivate folk to do things properly.
I am now applying the same thing to company accounts - sending out a letter with 60 days to go to the deadline saying "Get me your information in the next month or the fee goes up by £300!"
Overall I support a heavier fine on 31 January, I also think there needs to be more of an effort to understand the root causes. In some cases such as divorce or other major event it is understandable the records are not in proper order.
Stick - and carrot ?
Why not a £50 refund if you get it in before 31st December (or some other early date).
Child psychology suggests that rewards are more effective than punishment ... and it might save them that amount in reduced penalty processing.
@ mr mischief....absolutely no problem with your approach..
but I presume it works both ways....clients has a 25%/50% discount etc in fees if you are slow in dealing with matters? Although I think the strategy is slightly floored.....
You - Mr Client your normal fee is £500....so its an extra..£125 because it is after mid November....
client - erm...but even if i am late i only get a £100 penalty...?!
I am not suggesting the strategy is wrong.....it is always about a bit of carrot and a bit of stick....but I would suggest that given this strategy who wouldn't want a bigger penalty.
Just out of interest has anybody ever received a speeding ticket or perhaps driven over the speed limit.....? Presumably not, because I am guessing those who want an increase in the penalty for returns always leave with plenty of time to spare/never have a reason (good or bad) to speed (ieb get to the destination on time or before....similar to doing your return by 31st)?.....speed kills (so we are led to believe) - just giving this a little context.....
Disparate Housewives?
I wonder how many wives who are directors of their husbands' companies will end up with huge penal fines.
This government are setting out to destroy the middle classes. Bring back Mrs Thatcher!
Reasonable Excuse
We are currently trying to convince HMRC that a client's death is a reasonable excuse for late filing of the 2010 return.
Just one thought
I am not condeming the £100 fine but if you have no cash not submitting your tax return means that you only get a £100 tax bill, in the short term. Whereas if your tax bill is £10,000 and you put your return in on time and dont have the cash you have HMRC breathing heavily down your neck. Not helpful if you are tryting to raise the £10,000.
one thought is all it takes !
I am not condeming the £100 fine but if you have no cash not submitting your tax return means that you only get a £100 tax bill, in the short term. Whereas if your tax bill is £10,000 and you put your return in on time and dont have the cash you have HMRC breathing heavily down your neck. Not helpful if you are trying to raise the £10,000.
That's the one! No money to pay the tax bill, £100 buys you time.
HMRC rarely issue determinations these days.
And HMRC only chase compliant customers.
We have one case that was 5 years old when he came to see me now 9 years (even I have given up) has only had to pay a few £100....that have not been collected.
Action...from HMRC? you are having a Giraffe !
Word soon gets round that this works.
@ pauljohnston - add to that
the accountants fee and it really shouldn't come as a surprise that people pop stuff in late.
HMRC
Clients are claiming that HMRC are now reporting " tax arrears " to credit agencies. One client has had his credit rating reduced due to a penalty of £800.00 for none submission of a P35. This was in a year 2010 2011:the original busuness had ceased the year before. No return was due and nothing was owed. Although the panalty will be removed, the damage to the credit rating is done.
All over the UK many businesses will now suffer by having their credit ratings reduced.Many will be due to HMRC mistakes. How will that help economic recovery?!
£1 per minute late
We filed a tax return and the acknowldgement says 00.01.49 on 3 Feb. We have just received a penalty notice. That means they are being charged approx £1 per minute past the deadline.
I would have expected a little more flexibility, especially for those of us who work off the beaten track, but for those of you who think that HMRC should be paid in blood, would this rate suffivce.
Seconded
Hang on a minute Alan - if the fine were £1 a minute it would amount to £1.80p
Have you thought about combing through their accounts for all the small items they did not bother to claim? Maybe change their year end? Either way, it would give you a warm feeling inside if you were able to submit a revised return with £200 of tax savings. (Always pay people back double!).
@Alan
Tell HMRC you are keeping the penalty for yourself. I think you deserve the £100 for filing returns in the middle of the night. :)
@ Alan...to be fair to the revenue....
they did give your client a further 48 hours .... and he then failed by a further minute....some poeple just don't learn.....
Penalties
Haven't penalties gone up enough in recent years?
You talk about wealthy people not turning a hair at £100, but what about all the pensioners who are only in the SA system because they have a bit of bank interest or a let property. Should they be forced to pay £250 or £500 when they don't even owe any tax, or the tax owing is just miniscule?
The real reason so many people are being sent tax returns now is because the higher rate threshold has been either frozen or reduced for the last few years. Higher rate taxpayers are now very common, so it shouldn't be a surprise that more people have to do tax returns.
A more sensible statistic would be the proportion of tax returns that are filed late.
Chris
Penal
Chris makes a good point about pensioners and the poor - how many will discover 5 years down the line that they should have been submitting tax returns, and that even though they owe little or no tax they will have racked up £8k in penalties? I alluded earlier to a samilar issue regarding directors' wives.
Popular history has it that people were once deported to penal colonies for stealing so much as a loaf of bread. These crippling HMRC penalties are similar madness, and will help lead to another "brain-drain" of those who are able to leave the UK to live and work in a more sensible country.
Let the brain drain people go and good riddance
I get sick and tired of the wealthy complaining about their tax. If it is such a hardship then they should 'go elsewhere' and if they get ill, get everything stolen or lose their money some other way then they should be refused re-entry to the UK when they realise how much they now need our help.
There are people here who are really struggling and would be really happy to pay 50% tax if this meant they were earning decent money. The high rate tax payers don't pay 50% on all of their earnings ... which is what they try to make out is the case.
There is only so much money to go round (be it the UK, the world, or the blasted universe). In my opinion, the more some people earn the less is available for anyone else. The more money an individual earns means someone, somewhere, earns less. Yes, I've heard all the arguments that hard work and entrepeneurship should be rewarded, but at what point does it turn into greed? I've no problem with people being wealthy, but I do have a problem with wealthy people who whinge about paying tax and prefer to hard over large amounts of money to individuals who can help them avoid tax, rather than actually pay tax to help the other citizens of this country.
Why is it so difficult for people to understand that if the largest part of the population is poor, then the wealthy will eventually become poor, as there will not be anyone who can afford their goods & services (except other wealthy people).
It's Not the Wealthy who are Copping it...
Well I disagree, Shirley.
The middle classes are shrinking, which means there are fewer and fewer of us whose taxes, NI contributions, speeding and parking fines are having to support the burgeoning underclass of Jeremy Kyle show contestants. When we all emigrate there'll only be you and Jeremy left to police them all, so I guess you'll have to be the Chancellor and Jeremy Prime Minister.
The great brain drain of the 'sixties came about when those middle classes realised they could b*gger off to warmer climes and no longer have to support the work-shy classes via what was, under Wilson, a tax regime that served to fleece the middle classes. Instead of heavy-handed Super Tax, death duties, and Capital Gains Tax our current-day mangles are speeding and parking fines, petrol duty, and disproportionately large university fees and tax penalties.
Wishful thinking
[quote=ShirleyM]
"I get sick and tired of the wealthy complaining about their tax. If it is such a hardship then they should 'go elsewhere' and if they get ill, get everything stolen or lose their money some other way then they should be refused re-entry to the UK when they realise how much they now need our help."
Be careful what you wish for Shirley. The truth is that we need these people more than they need us. If wealthy people flee the country for more favourable tax regimes, it is you and I who will have to make up the lost tax receipts. Anyway, can you really imagine them crawling back on their hands and knees after losing all their money abroad and begging for re-admittance? Of course they're not going to lose their money, nor shall we refuse them medical treatment (after all, we don't refuse anyone else) and at least they paid taxes while they were here.
"There are people here who are really struggling and would be really happy to pay 50% tax if this meant they were earning decent money. The high rate tax payers don't pay 50% on all of their earnings ... which is what they try to make out is the case."
Are people really struggling? I feel very sorry for the unemployed, who are having a terrible time now thanks to the greed and incompetence of others, but most people seem to be doing very well from our current economic woes. Low interest rates on their mortgages, low prices in the shops and huge cash payouts in Tax Credits. It's incredible how much people get. Is it my imagination, or did most familes get by perfectly well once without these massive state subsidies?
"There is only so much money to go round (be it the UK, the world, or the blasted universe). In my opinion, the more some people earn the less is available for anyone else. The more money an individual earns means someone, somewhere, earns less."
I disagree with this. Money tends to be a reward for productivity (unless it's handed out in state benefits) and so increases the wealth of the nation. By wealth I mean non-monetary things too, such as schools, hospitals, law and order, new products/services, anything that increases the well-being of society. I don't think most people are made poorer just because others earn more. However, we will be poorer if we continue paying ourselves money that is not derived from wealth creation, as that money will ultimately lose its value.
"Yes, I've heard all the arguments that hard work and entrepeneurship should be rewarded, but at what point does it turn into greed?"
When people rig the market to artifically pay themselves more than their productivity deserves. By this I'm talking mainly about directors of top companies scratching each others backs and paying themselves massive bonuses that the ultimate owners of those companies (us through our pension funds) would never sanction if we had any say in the matter. But it's not just them. Tube drivers, for example, have rigged the market too by holding the public to ransom with constant strikes and forcing the transport authorities to pay them far more than the true market rate for their work. I don't mind about footballers, film stars, rock stars, etc. They get paid what the people who buy their services are willing to pay them, which is different.
"I've no problem with people being wealthy, but I do have a problem with wealthy people who whinge about paying tax and prefer to hard over large amounts of money to individuals who can help them avoid tax, rather than actually pay tax to help the other citizens of this country."
But there comes a point when tax is too high. Should people stop whining and just pay up whatever the Government demands for ever? For example, it is well known that the 50% tax rate is counter-productive. It was intended more as a political statement than a revenue generating measure. I agree that stamp duty evasion by non-doms, for example, should be clamped down on (although I believe this particular tax avoidance device is designed mainly to avoid CGT and IHT) but SDLT is too high anyway. A decent sized house in London and the South East costs about £500k now. 4% stamp duty comes to £20k. That's a lot of money just for moving house - a year's take home pay for many people. SDLT should be no higher than 1% - any more than that is just immoral.
"Why is it so difficult for people to understand that if the largest part of the population is poor, then the wealthy will eventually become poor, as there will not be anyone who can afford their goods & services (except other wealthy people)."
But are most people poor? The UK wouldn't be such an expensive place to live if that were true. I think part of the reason is the official definition of poverty (60% of median income). As such, it is a moving target and cannot ever be eliminated. Our grandparents and their ancestors knew what poverty was. People living in Third World countries know what poverty is. I don't think many people in the UK today are really living in poverty, not in the strictest sense of the word.
Why is it so difficult for people to understand that the more you tax an economy, the less effective that economy is. Bringing tax rates down usually creates more tax revenue, and vice versa. I thought we learned that lesson in the 70s and 80s. Seems like we need to learn it all over again.
Chris