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Timing of HMRC SA penalties

HMRC were late to apply late filing penalties/charges. Can this be contested?

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My friend submitted his 18/19 tax return on 31st May 2020.  4 months late

At the time he submitted return there was a late penalty fee of £100 and nothing else.

He had settled the bill along with tax liability and thought that was that. However HMRC have recently written to him (last 2 weeks) and added additional late payment fees and interest charges. I've told him that as the returns were late they had the right to charge but his bone of contention is that they should have added these charges at the time he submitted his return.

He is planning to appeal. I guess my question to you guys is, in your experience, does he have a prayer?

Replies (9)

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RLI
By lionofludesch
14th Sep 2020 20:52

Up to him but he's wasting his time.

There are separate penalties for late returns and late payments.

In fact, if he didn't submit his return until the end of May, I'm surprised he only got a £100 penalty. He should've got a further charge £10 a day from 1 May. Perhaps it might be better not to stir the pot.

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Replying to lionofludesch:
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By curiousmind
14th Sep 2020 20:55

lionofludesch wrote:
Perhaps it might be better not to stir the pot.

My thoughts exactly.

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By Paul Crowley
14th Sep 2020 21:12

Think the other daily penalty is still in the wings based on former clients with still outstanding tax returns.
None have the £900 or six month yet per HMRC agent site. None yet filed, 3 people checked

A bit snowflake style opinion to expect HMRC to change their routine for each person filing late.

There was a covid issue and less staff at work in HMRC

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By SXGuy
15th Sep 2020 09:19

How would hmrc know what interest and late payment penalties to charge before "your friend" submitted their self assessment? Think about what you've just said.

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By Duggimon
15th Sep 2020 09:52

If the filed return had no liability, there would be no interest or late payment fees. Only by filing the return are these triggered.

I would suggest you ask your client on what grounds he's appealing because it sounds like he wanted HMRC to apply the penalties before the return was sent, which is obviously nonsense.

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Replying to Duggimon:
RLI
By lionofludesch
15th Sep 2020 10:04

Duggimon wrote:

If the filed return had no liability, there would be no interest or late payment fees.

OP says that the taxpayer "settled" the liability.

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Replying to lionofludesch:
By Duggimon
15th Sep 2020 10:19

I know. Ergo there was a liability on the return, so penalties were applied.

The return may have shown income below the relevant thresholds and no liability, in which case only the late filing penalties would apply and not the late payment penalties applied afterwards. But as there was a liability to settle, it was paid late and more penalties then became due.

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By richard thomas
15th Sep 2020 19:59

What seems slightly odd here (though the OP's phraseology does not help - fees? what do you get in return for paying these fees?) is that daily penalties which were undoubtedly due for the period from 1 5 20 to 31 5 20 at £10 a day have not apparently been charged. In my experience dealing with hundreds of Sch 55 penalty cases you got the daily penalty assessment immediately after you filed in the period 1/5 to 29/7. Is this failure to penalise a COVID-19 phenomenon and people are getting the benefit of the doubt?

Paul Crowley's point is slightly different. In the past HMRC's computer would run a check of returns not received in mid July and any that met that criterion would be landed with an automatic £900 (daily) plus £300 (six month) penalty. It may be that these have been deferred because of COVID-19.

Anyhow there are no grounds for appeal against any penalties. They are a consequence of the client's dilatoriness. The OP does mot suggest there is a reasonable excuse. The claim that HMRC should have told him about late payment penalties is nonsense, for the reasons given by SXGuy.

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Replying to richard thomas:
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By richard thomas
16th Sep 2020 09:50

In second para I should have said "mid-August", ie after the 6 month point.

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