SA Online filers waiting for activation codes get two-week reprieve

HMRC has indicated that it will relent on charging late filing penalities for taxpayers who have registered with SA Online since 21 January but have not received their activation codes yet.

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Time for change's picture

Who says tax doesn't

Time for change | | Permalink

have to be taxing!

When is a (latest) filing date, not the latest filing date?

Surely this just muddies the HMRC waters, even more, this year?

John Stokdyk's picture

One taxpayer was advised about it last Friday

John Stokdyk | | Permalink

We're still trying to pin down the formal confirmation, but a freelance friend I talked to last night said she had been informed of the reprieve by the HMRC Online helpdesk last Friday (24th) when she had asked about her ID. The code arrived on Wednesday, but the person on the help line told her that as long as she paid the tax due by today (31st) she could file up to the 15th and not get a penalty.

I can see the sense in avoiding a rash of penalty appeals where taxpayers claimed their codes hadn't arrived in time - and HMRC may have long and tedious experience of this in previous years. But why it should happen now raises some questions... for example, we all know how bad the postal dispatch systems are at HMRC, could they be clogging up even more under the weight of demand for HMRC Online IDs at this time of year?

Another thought struck me that if you were a taxpayer at this time of year and for some reason couldn't complete your return (but could get a good approximation of the tax due), there could be a quick and easy way to buy an two extra weeks... [comment self-moderated to avoid publicising the hack too widely]

If anyone can set me straight on these points, I'd be very grateful.

stepurhan's picture

How is this justified?

stepurhan | | Permalink

I see two problems with this extension.

First, the tax return deadline is hardly a state secret, so how can anyone justify asking for a code so late? This is a discriminatory practice that penalises those who, belatedly, realise they need to get their affairs in order. Someone who has spent this week locating all their paperwork that drops it into an accountant tomorrow gets a penalty. Someone who hasn't even started looking for their paperwork yet, but applies for an authorisation code right now, gets another 15 days to bimble about.

But more worrying, as John Stokdyk suggests, this clearly demonstrates HMRC systems are not up to snuff. They are effectively saying that codes could take up to 25 days (from 21st January earliest code request covered to 15 February new deadline) to get a code out. This is an unacceptable delay for a government department to deal with a standard, easily automated, action. The volume is no excuse, as they should be prepared for it at this time of year. It makes a mockery of having a deadline if they have to adjust it to make up for their own short-fallings.  

taxhound's picture

UTR number

taxhound | | Permalink

I have a new client who can't find her UTR number.  She registered for SA in plenty of time , but had to ring HMRC to ask them to tell her the UTR number again last week (20 Jan) and of course they will only post the UTR number to her.  It still has not arrived.  She tried calling yesterday and asking them to fax it through but they would not.

So now her return will be late and it does not look like this exemption covers her situation.  I will of course appeal the inevitable penalty now they have agreed to this other extension, but as Stepurhan says, why have they given this extension now?  And why does it take over 10 days for anything to arrive that they post out?

Happy Up North Accountant's picture

I'm laughing at the comments    2 thanks

Happy Up North ... | | Permalink

For once HMRC shows a bit of common sense and leeway and all we as accountants can do is moan?

I for one applaud HMRC in this instance and hope this sort of policy continues. Evidently they're damned by us lot either way so they may as well act in a positive manner towards the tax payer where possible.

carnmores's picture

very happy indeed    1 thanks

carnmores | | Permalink

you are correcty , lets applaud anytime anyone gets a break!

IF!

Michael C Feltham | | Permalink

taxhound wrote:

I have a new client who can't find her UTR number.  She registered for SA in plenty of time , but had to ring HMRC to ask them to tell her the UTR number again last week (20 Jan) and of course they will only post the UTR number to her.  It still has not arrived.  She tried calling yesterday and asking them to fax it through but they would not.

So now her return will be late and it does not look like this exemption covers her situation.  I will of course appeal the inevitable penalty now they have agreed to this other extension, but as Stepurhan says, why have they given this extension now?  And why does it take over 10 days for anything to arrive that they post out?

 

Perfect excuse for a late submission, surely?

If (And this, is, let's face it, a rather big "If"), your client can prove HMRC's error.

 

Common sense... but what an inefficient process

James26 | | Permalink

Agree it is fairly common sense for those that haven't gone through the process before and who naturally might assume that their UTR and password is their logon and not realise the extra step.  Why there is this extra step I'm not sure, seems daft that you phone them up to say you need to file a tax return and they don't just have this setup already.  They ought to customise this to have the SA tax return auto-setup if that is the only thing you've asked to be setup, fair enough to go through an extra process to add bits that most people will never use, business returns, VAT etc.

However, for those who just need a password reset or similar this seems a bit unfair if they are also getting an extension.

Agree with Happy Up North!    2 thanks

RJandCo | | Permalink

What is it with us accountants? Personally,  I applaud gratefully any recognition by HMRC of the problems facing taxpayers in the real world,  and any (rare enough) outbreaks of common-sense  that might emerge as a result.  Just because a small minority (and it will be very small) might seek to take advantage of this little unofficial break there is no need to be so self-righteous.  I suspect most of the people affected will at least have made some sort of genuine effort to deal with their affairs on time, and will have been thwarted only by their lack of understanding of the weird system used by HMRC for new enrolments.   These are generally unrepresented taxpayers,  probably therefore at the lower end of the economic scale.  An unjustified £100 fine would hurt them more than most. 

Remember, no-one  is getting off any tax here, or obtaining unjustified time to pay.  Just saving a £100 penalty,  where in the majority of cases it wouldn't have been justified anyway.  So what if a few people might be a little undeserving of the break, all the more reason for HMRC to up its game so that this sort of accommodation shouldn't be necessary.

Lighten up guys (and gals if appropriate)!

Richard Joseph

 

 

A one-off or not

wyoming | | Permalink

I have no problem with this concession, but the (apparent) comment from HMRC that an extension has always been in place in these circumstances is a bit mystifying. I think it's more likely that they have decided to do make the concession this year because of all the new cases drawn into SA by the HICBC. I wouldn't advise any unrepresented taxpayers to rely on a repeat next year! 

stepurhan's picture

Not objecting to the concession per se    1 thanks

stepurhan | | Permalink

I'm objecting to the selective nature of the concession. Any extension to the deadline should be an all or nothing thing. How is it fair for one person who gets their act together for the five minutes it takes to request a code to get an extension and someone who puts in more of an effort, but is one day late getting stuff to their accountant to be fined?

But aren't most concessions selective?

wyoming | | Permalink

I see your point @stephurhan, but aren't most HMRC concessions selective? If you don't have the access or the necessarily skills to file via the Internet, you have to submit a paper return by 31 October to avoid a penalty rather than 31 January. If you have a decent-sized employment source, you have the option to pay your tax (within certain limits) in twelve instalments taken 13-24 months after the end of the tax year in question. Where is the similar concession for those who are self-employed or with rental businesses or with small employment sources? Those who pay more than 80% of their total tax bills at source avoid payments on account re their Self Assessment liabilities when others don't. I could go on!

This reprieve hit the (BBC)

tonyglasbey | | Permalink

This reprieve hit the (BBC) News about Thursday 30th. I phoned HMRC, who told me that it had been extant for about two weeks. Funny I never saw it publicised anywhere, nor was it on HMRC's website.  AcWeb, did you know back then? And if so, why wasn't there a banner headline then? It surely was a big enough development to warrant immediate exposure.

I, too, congratulate the Revenue for this common-sense move, but bemoan an apparent lack of candour.

Concessions:    1 thanks

Michael C Feltham | | Permalink

stepurhan wrote:

I'm objecting to the selective nature of the concession. Any extension to the deadline should be an all or nothing thing. How is it fair for one person who gets their act together for the five minutes it takes to request a code to get an extension and someone who puts in more of an effort, but is one day late getting stuff to their accountant to be fined?

 

All HMRC concessions are discretionary.

And always have been: for example the ESCs were.

And still extant under the new regime are HMRC's extra-statutory powers to grant relief in exceptional cases of imposed hardship: i.e. those circumstances where application of statutory law might be mitigated by circumstance.

Sometimes the taxpayers: sometimes HMRC as a delegated agency to impose law as delineated by statute (e.g.s Finance Act, TMA, ICTA et al).

If government via the FAs impose any obligation upon the taxpayer, where compliance thereto becomes difficult or impossible, then the taxpayer may seek relief from such burden.

Both sides of HMRC, viz, Revenue and Customs enjoy the power to exercise such discretion in exceptional cases.

Whether they do or not, is usually driven by the expertise and determination of their agent.

IMHO, naturally!

 

stepurhan's picture

Odd choice of example    1 thanks

stepurhan | | Permalink

wyoming wrote:
If you have a decent-sized employment source, you have the option to pay your tax (within certain limits) in twelve instalments taken 13-24 months after the end of the tax year in question. Where is the similar concession for those who are self-employed or with rental businesses or with small employment sources? Those who pay more than 80% of their total tax bills at source avoid payments on account re their Self Assessment liabilities when others don't. I could go on!
Can you provide a link that shows how people under PAYE pay their tax after the end of the tax year in question? Unless I have been completely misunderstanding PAYE all these years, tax is taken within the same tax year as the income as a rule.

Assuming I haven't been misunderstanding PAYE, why are payments on account an unfair burden? Let us assume a self-employed person that either has steady income, or is well-informed enough to know they can reduce payments on account if their income has fallen. On that basis, each payment on account will be half of the total tax for any given tax year. So on 31/1/2014 a self-employed person will pay 50% of their total tax for the tax year to 5/4/2014. A person under PAYE will have paid 83% of their tax for the same tax year at that date. By the time the self-employed person makes their second payment on account, bringing their total paid to 100% of the tax for the year ended 5/4/2014, the employed person has paid 100% of that year and 33% of the following year as well. Which is in need of a concession?

Regardless, the concession in question is all relevant to self-employed people. Those who asked for a code at the last second on the 31/1/2014 get an extra 15 days and don't even need to have got their accounts records together yet. Those who missed their accountant shutting up for the day but dropped all of their records through the letter box a few hours before midnight get a penalty. They are both self-employed, but it is the one that made some sort of effort to get the information together before the deadline that is penalised.

Not odd at all

wyoming | | Permalink

@stephurban - this is fairly basic stuff, so I'm surprised that you have asked for a link, but here it is anyway.

http://www.hmrc.gov.uk/manuals/sammanual/SAM141010.htm 

Any SA liability (as long as it's less than £3K and the TR is submitted before 31 December) can be collected via the following year's PAYE code - so for 2012/13 this would mean settling the liability from April 2014 to March 2015 (i.e. 13-24 months after the tax year). This can obviously only be done if the taxpayer has an employment source.

I didn't say anything about the liability itself arising from employment income, I was simply talking about the SA liability - whatever type of income it arises from. Clearly the taxpayer will pay the tax due on his employment source at source under PAYE provided his/her PAYE code is correct.

Similarly, the concession that states that you are not required to make POAs for the following year if you pay more than 80% of your tax "at source" is far more likely to benefit the employed than other taxpayers. I'm an employee myself, so I'm certainly not complaining, I was simply, if you recall, trying to make the point that all HMRC concessions are selective and they benefit certain taxpayers but not others.

 

 

stepurhan's picture

Not everyday PAYE then

stepurhan | | Permalink

An SA liability, so income other than PAYE. Limited to liabilities of £3,000, so not a huge source of additional income. Requires the employee to have an employment source sufficient to collect the additional tax, there being a limit on the deductions from PAYE income. Still only avoids payments on account if 80% tax is paid at source. That's a bit more detail than your original statement of

wyoming wrote:
If you have a decent-sized employment source, you have the option to pay your tax (within certain limits) in twelve instalments taken 13-24 months after the end of the tax year in question.
implies. Your sentence as given implies all under PAYE are able to defer all their tax for 13-24 months. The real situation, and I was aware of this rule, is a heck of a lot more specific and limited than that.

So, if you pay 80% of your tax by 5/4/2014, enforced through deduction at source you get to hold off paying the rest (subject to a limit of £3,000) until after the self-employed person makes their second payment on account.That still means you have paid 80% of your tax 10 months before the self-employed person only has to pay 50% for the same year. 

Now at this point, you are possibly expecting me to say that I realise this £3,000 will end up being paid well after the self-employed person has paid 100% of their tax for the same tax year. Gosh, that does seem unfair..........until you look back at the figures I presented earlier. Because of the 80% at source rule, the £3,000 to be held over is at most 20% of their total tax bill. As I showed earlier, an employed person will have paid 33% of the next year's tax bill by 31st July. Assuming some regularity to their income, they are still 13% worse off than the self-employed person at that date. Even if you assume that the tax paid in any given year is only the deducted at source tax (i.e. 80% of their whole tax bill), they will still have paid just over 26% of the following year and are still worse off. Again, who is in need of the concession here?

This still ignores the fact that this particular concession treats differently two self-employed individuals in identical situations, except for one of them taking a very small action. To compare it to employed versus self-employed, between whom there are a huge number of non-concessionary differences to the tax rules, is just muddying the waters.

So now we're clear

wyoming | | Permalink

Yes, I was talking about an SA liability, not routine PAYE. As the whole thread concerned SA returns rather than PAYE liabilities I thought this would be "taken as read" but clearly not by all.

I said nothing about unfairness, just trying to make the point (again) that HMRC concessions are invariably selective so, to make an objection (as you did) concerning one particular concession benefitting one group and not everyone seemed, and still seems, an odd flag to be waving.

stepurhan's picture

Distinguishing differences

stepurhan | | Permalink

Self-employed and employed are two different groups. Bringing in people with employment is, by definition, bringing a separate group into the mix. If you then simply talk about the tax liabilities of this entirely different group it is not "taken as read" that we are still talking about SA.

As I've already pointed out, the employed person is actually worse off, which is the opposite of the point you originally made. I'd go further and say this isn't even a concession. Processing separate payments will have additional costs to both HMRC and the taxpayer. It is therefore to the benefit of both for the tax to be collected through the existing PAYE system instead. No additional payments being made, not additional admin costs for either side. A concession is one side giving a benefit to another without requiring anything in return.

Regardless, in the case of this concession we are not dealing with two different groups. Comparing fully self-employed to almost entirely employed is comparing apples and oranges. In this case we are dealing with self-employed people identical in every way, apart from one making one tiny action. Are you really saying that one tiny action alone merits 15 days extra filing time where an otherwise identical individual gets a £100 fine?

OK - my last post on this thread!

wyoming | | Permalink

Yes, of course the self-employed and employed can be classed as different groups but many, many taxpayers that I deal with are both at the same time - for example the Locum GP who works mainly on a s/e basis but works one day a week in the local hospital as an employee. Or the hospital consultant who is principally an employee but also has a private practice on a s/e basis. In my world, these are not "separate groups" but very much overlapping groups.

I have at no stage talked about unfairness in terms of various concessions. That is entirely your spin on what I have been saying. All I was attempting to do (not very well it seems) is to point out that all sorts of different concessions exist that apply to specific people in specific circumstances and this is just one more. Yes it might not be "fair" that a specific group escape a penalty but if you're going to go down that road, it's a very long and bumpy one!

stepurhan's picture

Fair concessions

stepurhan | | Permalink

My point is that to compare totally disparate groups makes no sense. The differences between those too groups are not biased concessions, but reflections of the different parts of the tax system that apply to those different groups. If you are going to go down that route, you can say it is an unfair concession that a company with a 31 March year end can file its tax return two months after a self-employed person. Or that it is an unfair concession that someone selling one house gets charged capital gains tax, and someone selling houses regularly gets charged income tax. Neither of these are concessions, they are differences in the way tax law treats different activities and entities. Concession in this context means the law allows HMRC to do something (e.g. charge penalties) but they voluntarily restrict that power.

So, if you really believe there are existing concessions that treat businesses in the same position differently, please provide an example. Note this must meet two criteria. It must be a concession, which is a relaxation of the tax laws as written, as is the case with the deadline extension. It must also not be available to all of a specific type of taxpayer (self-employed, employed, company, etc) for little or no reason as is the case for this deadline extension.

carnmores's picture

there a dead horse round the corner

carnmores | | Permalink

you want to flog it or flog it to Tescos?

stepurhan's picture

Are Tescos still buying?    1 thanks

stepurhan | | Permalink

I'm sure the price of a dead horse would be good for a few pints, were I not to be off pints at the moment.

Hang on, I just saw it move!........Nope, false alarm, it was just bouncing about a bit from how vigorously it was being flogged.