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ICAS urges HMRC to suspend SA late filing penalties

HMRC should automatically waive late self assessment filing penalties up to three-months as some firms are significantly behind on their tax return progress due to the impact of coronavirus, according to ICAS.

16th Nov 2020
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Bruce Cartwright, the chief executive of the Scottish accountancy body, has written to HMRC’s Jim Harra to highlight the effect the coronavirus pandemic is having on the already intense build up to the 31 January peak period. 

As a result of the combined effects of the coronavirus and the intense January workload, the professional body’s chief executive reports that some firms are significantly behind compared to prior years in the number of tax returns progressed or completed. 

Cartwright called on HMRC to automatically waive penalties for up to any three-month delay in an annual tax return filing for those returns due between now and 30 June 2021.  

“Accountancy and tax agent firms are operating under great stress and are the unsung heroes of implementing the CJRS and SEISS and for enabling the Chancellor’s schemes to keep many employees and businesses going in these extraordinary times,” he wrote in the letter.

“Such firms are caught in the middle between HMRC and their clients and facing difficulties due to coronavirus; they are trying to help client businesses but not getting any help with their own businesses.”

Cartwright adds that the three-month late filing penalty delay should be automatic and not require an appeal because “the costs of doing so in terms of our time would outweigh the saving of a £100 penalty”. 

The impact on the compliance cycle

The build up to 31 January is always a period of intense pressure, but ICAS went on to list the aggravating factors brought on by the pandemic which are causing a significant backlog of work for accountancy and tax agent firms, including:

  • Some clients have stopped sending in accounts due to staff on furlough and working from home restrictions.
  • Some accountancy firms are struggling with the practical difficulties of working from home, such as accessing information and IT systems.
  • Smaller firms are spending a significant amount of time assisting clients with CJRS and SEISS claims.
  • A capacity crunch within firms is already forcing long work hours - and senior partners are concerned about asking employees to work even longer hours.
  • Clients are working to the three month Companies House filing deadline extension, meaning the corporation tax information for returns is not always available on a timely basis.
  • The strain on corporation tax extends to iXBRL tagging of accounts, which is typically undertaken by those finance teams or agents who are already pressured by accounts and/or tax filing deadlines. The pressure from the pandemic also affects the preparation of related filings such as that for CIR, group relief and CFC.

The accountancy body notes that it’s not just Covid-19 that’s disrupting the traditional compliance cycle; agents will also have to assist businesses implement changes arising from Brexit. 

ICAS also called on HMRC to accept that “agent pressures of work in these trying circumstances of the pandemic will be accepted this year as a ‘reasonable excuse’ for late filing”. Rebecca Benneworth agreed on this week’s Any Answers Live, saying they need to “have someone take the paper out of the printer so they don’t print them in the first place”. 

Profession split on how to mitigate impact on busy season

ICAS’s call to waive self assessment penalties goes one step further than ICAEW, who is seeking views on whether it should ask HMRC to extend the self assessment deadline or waive the penalties. 

AcccountingWEB members are split on what should be done to mitigate the Covid workload pressures as the self assessment deadline approaches. In a poll conducted last week, 47% of respondents backed an extension to the deadline, while 44% believed waiving late penalties is the answer, and 9% disagreed with any invention and voted for the deadline to remain as 31 January.  

On this week’s Any Answers Live, practice owner and coach Della Hudson backed the call to waive penalties, rather than extending the deadline. 

“The accountants I work with generally got ahead on their self assessments earlier in the year. They found that a lot of their clients, because the business was quieter, were getting on with their tax and accounts,” she said.

“[Firms] who aren’t ahead - as I know some furloughed staff or shut down - will be under pressure. But it is a lot easier to waive the penalties for a couple of months than shift the deadline, because you have people claiming universal credit who still need all those figures up-to-date.” 

Rebecca Benneyworth said extending the deadline would be a “huge task” as there are so many other elements tied to the 31 January date, such as certain loss claims, IR35, Class 2 NIC - the list goes on. 

Instead, she’s also in favour of a two month moratorium on penalties. “I did get ahead, but the trouble is for sole practitioners who don’t have staff have been doing the normal, and on top of that they’ve been trying to get their heads around CJRS (version one, two and three), SEISS and the rest of it and I know there are accountants at the end of their tether,” she said.

Replies (27)

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By jon_griffey
16th Nov 2020 14:53

If they do suspend the late filing penalties, or extend the deadline then they need to announce it at the very last minute otherwise clients will simply sit back and take advantage of the new deadline, by which time it will be 5 April when we will be busy again. We have seen exactly this with the 3 month extension to the Companies House deadline.

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Replying to jon_griffey:
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By Geoff56
16th Nov 2020 17:36

I disagree, Jon. I don't want to work myself into the ground (again) trying to meet 31st January deadlines, only to find out at the last minute that it wasn't necessary. I'm not sure how aware clients would be of an extension anyway.

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By meadowsaw227
17th Nov 2020 09:59

I haven't told any of my clients about the Companies House deadline extension nor would I tell them if HMRC extended the SA deadline.

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By 0288403
17th Nov 2020 11:55

I only tell the clients when there is no chance of making the deadline - and i have even withheld this from a couple of the juniors - keep the hammer down.

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By Diana Miller
17th Nov 2020 10:46

Completely agree. What I need is a reduction I n my stress levels now- not working myself into the ground for the next 2 months to get an eleventh hour extension.

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Replying to jon_griffey:
By Paul Donno
17th Nov 2020 09:38

Completely agree Jon.

Personally I don't agree with any extension as we should all have our house in order anyway!

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By Cathy Milligan
17th Nov 2020 10:03

I think that the deadline should stay at 31 Jan and that penalties should be suspended.
But, I don't think Joe Public should be told.
That way, they (technically) will bring information in as normal and we can "do our best" to get it done on time and/or "sort the penalties out for you"
Or perhaps, penalties only suspended for returns submitted by an agent - but again, not made public.

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By OrmeGoat
17th Nov 2020 09:34

My MP sent me this email last week:

"Thank you very much for your recent email with regard to whether the current deadline for self assessment submissions can be relaxed and extended due to a heavy covid workload.

I am pleased to confirm that I have written to the Chief Executive of HMRC to make this request.

I will write again, when I have received the response."

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By colinhigginson
17th Nov 2020 12:22

That is better than a reply I had from my MP. A 2 page generic letter telling us how much help the government has given businesses during the pandemic.
Nowhere did he address my question so big up your MP for reading your email and acting upon it.

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By bendybod
18th Nov 2020 12:04

Which will be about four months time and so too late!!

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By 0098087
17th Nov 2020 09:36

What [***] me off the most is the 14 day deadline for filing CJRS claims for November. The pressure it's putting us under plus dealing with our normal work in a short month is enourmous.

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By Alwaysreading
17th Nov 2020 12:10

Totally agree. The pressure on payroll bureaus at the mo is incredible. Additional time to work out the pay and now have to get the claim within 14 days. Have already had clients adding to the stress which does not help.

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By 0098087
17th Nov 2020 12:13

You just feel like Christmas is cancelled at the moment, Oh and when clients go, oh well, at least you've got work. We get no help from central government, nothing, They just don't care.

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By johnjenkins
17th Nov 2020 10:48

As Companies House have increased the deadline then surely HMRC should do the same. Then again one Government department won't necessarily agree with another. Still we've now got devolution as well as covid and Brexit to blame.

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By 0288403
17th Nov 2020 11:57

Suspension of penalties would be best - keep the pressure on the tax payers. Perhaps someone might like to mention the amount of additional time being spent waiting for HMRC to pick up the phone and using covid as the excuse.

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By Southwestbeancounter
18th Nov 2020 18:32

It took me an hour and ten minutes on the phone to HMRC today - with three separate operatives via three separate phone calls that they transferred - to get a CIS/PAYE allocation sorted out and apparently it won't show up online until at least 1 February 2021!

It's a one-sided shambles!!

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By Diana Miller
18th Nov 2020 19:01

And of course you will need to do it all again on 2/2/2021 when it does not show. Waited 5 hrs for a web chat last week ( because we were trying to get something to print off to prove to the client it was not our fault they had not got an SMP reclaim)

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By HLB
17th Nov 2020 12:50

I am amazed at those who think that extending the deadline or suspending penalties is not necessary and am astonished at the arrogance of the person who says we should all have our house in order as if there is no pandemic. I have had my house in order for 33 years yet have never faced a position where team members are off work self-isolating, off work having caught the virus, too damn frightened to attend work or visit clients, two senior members gone to work in industry on 1 April and not being able to find replacements in a market that disappeared overnight on the first lockdown. I have never been in a position where I have had to divert into our payroll bureau team members who usually prepare Accounts and Tax Returns or a payroll manager regularly working 50+ hours a week to cope with furlough claims. I have never had to deal with the volume of clients in distress and wanting help. Then there are the clients who have lost their businesses or passed away, two in the last week.

I so wish my house was still in order!

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Replying to HLB:
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By Diana Miller
17th Nov 2020 13:43

Oh boy do I sympathise. I think the was this year has affected us depends very much on the nature of our individual portfolios and also of course the staffing issues. My practice is not as established as yours so it is actually, for me personally, re-assuring to know it is not just me that has been finding this almost
impossible to juggle, physically exhausting and mentally draining. I wish you all the best for the next 2 months. I have been in practice for 30 years albeit my own boss for less and I have never had a year like this.

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Replying to HLB:
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By Diana Miller
17th Nov 2020 13:43

Oh boy do I sympathise. I think the was this year has affected us depends very much on the nature of our individual portfolios and also of course the staffing issues. My practice is not as established as yours so it is actually, for me personally, re-assuring to know it is not just me that has been finding this almost
impossible to juggle, physically exhausting and mentally draining. I wish you all the best for the next 2 months. I have been in practice for 30 years albeit my own boss for less and I have never had a year like this.

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By 0098087
18th Nov 2020 09:28

Our house looks like a bomb has hit it. Who can plan for a pandemic?
Oh and I see HMRC arseholes have still not extended the deadline for claims from 14 days. WTF are they thinking.

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Tornado
By Tornado
17th Nov 2020 13:40

I think suspension of penalties until at least 5th April 2021 is the best way to deal with this.

I also think the Government should seriously review their Making Tax Digital plans and immediately pause all future developments indefinitely. It would seem to be a somewhat perverse policy to try and press ahead with this whilst hundreds of thousands of businesses are dealing with very serious situations and the last thing they will be interested in is this fanciful project. The Government need to be pragmatic here and accept that it is just not going to happen at the moment, however much they want it to.

We already have perfectly good tax management systems which work very well (and are being improved each year little by little anyway), so there is absolutely no need to push ahead with the MTD project at the moment (and hopefully never).

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By Southwestbeancounter
18th Nov 2020 18:34

Spot on - especially the 'hopefully never' bit!!

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By tedbuck
17th Nov 2020 13:50

When you stop to think about it HMRC need the Revenue from the fines.

The government said they wouldn't raise taxes so they grabbed at the GDPR fines and haven't they been large beyond reason?

Now they aren't going to send paper reminders for confirmation statements so that will end up as for fines along the line.

They don't bother to send out CT reminders to pay so people forget - more interest to collect.

The whole emphasis is changing to stealth taxes - HMG gets the money but it isn't HMG's fault its the taxpayer.

Highly dishonest in my view but reluctantly we cannot really expect any better from the politicians and taxmen of today.

If you compare HMRC's service now to what it was 20 years ago there just is no comparison then it was pretty good but now it is a shambles and with few staff who can actually answer questions. Not their fault I guess but lack of training and direction by those put 'in charge' of HMRC.

I expect that Rishi will tax the dead a bit more - after all they can't complain.

What sort of idiot talks about taxing people's mileage and putting in lots of cameras etc at great cost when the same result could be obtained by increasing the tax on petrol? It comes down to being con-men and being dishonest with voters to try to gain their support.

As for accountants - well they see us as targets because we try to get the right result whereas their computersised sytmes get them more tax which with a bit of luck they can keep.

A cynic? Me? Just a long time in this profession seeing the 'service' by HMRC go completely down the tubes with the rest of the Civil services arm in arm with them. FCA for a start ICO follows on - all a load of jobsworths making life difficult for other people but collecting huge fines on the way. I bet they even get bonuses for doing it.

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Replying to tedbuck:
Tornado
By Tornado
17th Nov 2020 14:24

"As for accountants - well they see us as targets because we try to get the right result whereas their computersised sytmes get them more tax which with a bit of luck they can keep."

Perhaps we are just too obliging and need to be a bit more uncooperative with HMRC. It is natural for us to try and do the right thing and go out of our way to achieve this for our clients and ourselves, but it does require the Government to give us tasks that are achievable. With some 20,000 pages in the tax code to abide by and numerous new emergency laws, the will to co-operate is disappearing fast and a more uncooperative approach may become a necessity rather than a choice in the future.

Whilst Accountants are no more important than anyone else, the Government would miss our help if it was no longer there.

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By Southwestbeancounter
18th Nov 2020 18:35

Let's be honest, the tax system would collapse without us and they know that!

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By bendybod
18th Nov 2020 12:10

Given that Covid is an excuse for HMRC to be tardy, the least they can do is cut us a little bit of slack. We're trying to run our own businesses and help our clients to run theirs. I agree that waiving penalties is a better option than extending the deadline - after all, they do need the tax revenues from those who are able to get them in and paid.

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