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Taxpayers urged to appeal deadline penalty

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2nd Feb 2016
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The Low Income Tax Reform Group (LITRG) has encouraged taxpayers who missed the self assessment deadline to appeal penalties if they think they have a reasonable excuse.

LITRG is concerned for taxpayers who have been inflicted by extenuating circumstances which may have prevented them from making the deadline, and thus, will incur the £100 penalty.  

According to HMRC, just shy of one million people will have failed to file their tax returns online before the deadline. This figure has increased from the 890,000 who missed the deadline last year.

The recent severe weather conditions that hit the northern parts of the UK may have caused an upsurge of businesses missing the filing deadline, which concerns the LITRG.

Reasonable excuse example

In a recent example, a tax payer appealing against her late tax return penalty dodged a fine in December after the first-tier tribunal ruled she had reasonable excuse for allegedly failing to file her 2012/13 tax return before the 1 February 2014 deadline.

Ann Hauser (TC04799) was issued with a £5,726 penalty after she claimed she posted her tax return on January 31 2014. This return was not received by HMRC. Hauser claimed her husband keyed in the data and submitted the tax return on 31 January.

The appellant printed out her tax return at the stage where it invites the person completing the form to save. HMRC argued that the screen would have displayed ‘not submitted’, but Hauser remained defiant against HMRC’s claims.  

The tribunal accepted that Hauser attempted to deliver the tax return on time. While they questioned why HMRC’s subsequent warning letters didn’t trigger Hauser to check online, they accepted that she did resubmit her form once HMRC informed her that a glitch may have prevented her not being captured.

The first tier tribunal’s ruling reminds taxpayers who unwittingly missed the self assessment deadline that if a mistake is a genuine error, HMRC are not entitled to charge a penalty.  

What is considered a reasonable excuse?

LITRG notes that they supports HMRC’s pursuit in encouraging people to file on time, but issued this support to placate tax payers fears who have genuine reasons for their delay.

According to HMRC, a reasonable excuse is something that occurs beyond the control of the taxpayer which prevents them from submitting their tax return on time. These excuses, as listed by HMRC, include:

  • your partner or another close relative died shortly before the tax return or payment deadline
  • you had an unexpected stay in hospital that prevented you from dealing with your tax affairs
  • you had a serious or life-threatening illness
  • your computer or software failed just before or while you were preparing your online return
  • service issues with HM Revenue and Customs (HMRC) online services
  • a fire, flood or theft prevented you from completing your tax return
  • postal delays that you couldn’t have predicted

Anthony Thomas LITRG chairman, said: “We are concerned that people may feel panicked by penalty notices from HMRC and just pay financial sanctions for filing Self-Assessment forms late without considering that there may be excellent reasons for the delay in filing that may make them eligible for special treatment.

“There is a danger that people wrongly think that the automatic £100 (min) penalty for those who missed the deadline by a day or two has been scrapped because the Government was consulting on possible reforms to the penalty system.”

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