HMRC U-turn on late filing penalties

Share this content

HMRC has relaxed its conditions for accepting appeals against late filing penalties for self-assessment tax returns.

This change in practice was first highlighted by The Telegraph who obtained a leaked memo from HMRC. The HMRC position was finally confirmed on 5 June 2015 after huge amount of press coverage on the issue.   

The fact is HMRC doesn’t have the sufficient resources to check in detail every reasonable excuse offered for a late tax return, so from now on it will accept those excuses on face value if all of the following conditions are met:   

  • The penalty relates to the late filing of a 2013/14 SA tax return, not to returns for earlier tax years and not for returns relating to any other taxes
  • The 2013/14  SA return must now have been received by HMRC
  • The tax due for 2013/14 must have been paid

This means that taxpayers who submitted their appeals on time, and included a reasonable excuse for lateness, should get their late filing penalty cancelled. Is that fair?

It may be fair in respect of the 2013/14 tax returns, but it is not consistent or fair in respect of late filing penalties for earlier tax returns.

Philip Fisher points out that HMRC have widened the scope of what they will accept as a ‘reasonable excuse’ from only the most extreme of circumstances such as death, fire or flood to this list that includes:

  • Computer failure
  • Service issues with HMRC online services
  • Postal delays

Cases challenging late filing penalties for earlier years are still working their way through the courts. The recent case of Brian Higgins is a typical example of a taxpayer who had ‘service issues with HMRC online services’ as the required authorisation code for his tax agent didn’t arrive from HMRC in time. However, the Tribunal upheld Brain’s late filing penalty.

As HMRC now accept that a problem with its online service as a reasonable excuse for late filing (without further investigation), would it not be equitable to cancel any outstanding late filing penalties where that excuse has been given in the past?

HMRC say they won’t accept any further appeals against penalties for late filing of 2013/14 SA returns, as the 30 day period has now closed. However, the First-tier Tax Tribunal may accept a late appeal, although that would mean the taxpayer has to incur the cost and worry of taking his case to the Tribunal.   

The change in HMRC practice over SA late filing penalties will be extended to RTI late filing penalties, with further details to be announced by HMRC later this week. Watch this space!

About Rebecca Cave

Consulting tax editor for I also co-author several annual tax books for Bloomsbury Professional and write newsletters for other publishers.


Please login or register to join the discussion.

09th Jun 2015 09:29

Why they don't

just cancel all outstanding penalties, don't have a "what is not a reasonable excuse scenario" change the date to 31st March instead of 31st Jan (second payment 30th Sept) and just have £100 penalty for non filing on time.

Is it fair? Probably not, but then HMRC can and do more or less what it wants and we have to accept the consequences. Just enjoy any little benefit we get from them.

Thanks (1)
09th Jun 2015 18:28


when a price is reduced in a shop do we all expect a refund

Thanks (0)
10th Jun 2015 14:03

Flawed analogy

carnmores wrote:
when a price is reduced in a shop do we all expect a refund
All taxpayers affected "bought" the penalty on 31/1/2015 when they failed to file by that date. If a shop discovered it had overcharged everybody buying an item on a specific day but, despite having the details of all affected customers, only refunded those who complained within a certain time afterwards then would that be fair?
Thanks (2)
10th Jun 2015 12:33


So HMRC have relaxed rules for appeals against late filing of 2013/2014 Tax Returns.

Sounds great!

However, it appears they will not accept appeals now as outside 30 day limit.

That does not sound like relaxation at all!!

(Ok, you can go to Tax Tribunal but for a £100!!)

Tell me I have misunderstood 


Thanks (0)
By Ninian
10th Jun 2015 12:47

SA penalties

There could be quite a few people who didn't appeal within 30 days as they felt they had no excuse under the then-prevailing regime.


I would suggest they try a late appeal on just those grounds - otherwise HMRC's 'concession' is somewhat devalued.





Thanks (0)
By Ammie
10th Jun 2015 13:02


HMRC seem stretched, moral is low in many departments and inconsistencies in treatment of tax payers is becoming more widespread. In other words the cracks are appearing and widening.

We have all spent ridiculous amounts of time, even on agents limited dedicated phone lines, trying to gain sense, answers or information. They cannot cope nor care, certainly in the front line, but still expect strict compliance, or else! .

The apparent implementation of ever widespread IT control to replace real staff is breaking down. Hence, why over the last 10 or so years more and more responsibility to get it right is placed on the tax payer with the threat of burdensome financial penalties declared to put the fear into non compliance, thus releasing HMRC resources to chase non compliers and evaders and, of course, save money, at the expense of the taxpayer.

Essentially, HMRC do as they feel and use their statutory powers when it suits them. You may be lucky or you may be punished, sometimes it is a lottery. As I was once arrogantly told by a senior official "Fair? What is fair? We decide and can do as we please and there is nothing you can do about it."  Very heart warming!



Thanks (0)
10th Jun 2015 13:07

Tax based penalty

The only reasonable position is for HMRC penalties to be tax based so if there is no tax due on a late filed tax return there should be no penalty . Otherwise taxpayers should get their act together and file on time - they get enough warning notices BUT what if HMRC have been writing to an incorrect address and post is not signed for ? I would like this to be added to "reasonable excuse" .

Thanks (1)
By Ammie
10th Jun 2015 13:27


Unfortunately, this is a tricky subject because there will always be exploiters out there trying to take advantage and many will, so sometimes a heavy handed approach is the only way.

The difficulty is that too often it effects tax payers who do not deserve punishing.

Many clients suffer with what I call the "homework syndrome", whenever the deadline it won't be dealt with until the evening before!!

Thanks (1)
10th Jun 2015 13:55

Refund Due or No tax due

I feel that these are two situations where the £100 penalty should not apply until 31 March.  Tax is not at risk and late filing penalties seem harsh.  Otherwise file on time (may be allow to Feb 2 for electronic filing failures) or pay the penalty.

Thanks (1)
10th Jun 2015 14:41

HMRC are fair

Over all, I repeat over all, I have found HMRC pretty good in reversing penalties and fines. of course it all depends on factors like, who's desk it falls on, what mood they are in, and possibly what day of the week it is.


Make sure you get your appeals in early, and keep appealing, I have found letters are best.

Thanks (1)
10th Jun 2015 19:42

It always their fault
Let's get real,most of us are just to lazy or disorganised to file weeks or months before the big day.
We have had almost 9 months to get everything together but still we chase it to end and then the system crashes,or whatever
I love reading the stories about the saddos who divorce themselves from their family and Turkey and file on Xmas day without system clog worries!
Let's get real.a company needs to file its accounts within x timeframe if it is a Plc .when accounts are delayed for whatever reason ,you know the co is in trouble,at least statistically.
Think same concept ,steel test should apply

Thanks (1)
11th Jun 2015 08:38

Good points well made

Thats true.

Thanks (0)
11th Jun 2015 13:07

Slippery slope

...when you start unilaterally not pursuing penalties for operational reasons because your actions  can affect other taxpayers' legitimate expectations. 

Going back to only penalising cases in which there has been a loss of tax would be sensible and essentially fair.


Thanks (0)
By Ammie
11th Jun 2015 13:35


Good analogy by Stepurhan, but then isn't that how much of commerce works? A don't ask, don't get principle.

Ultimately, the taxpayer only has himself to blame.

These rules may not have been introduced if everyone behaved themselves and filed their returns. People will push their luck and many get stung as a result.

A simple solution could be, pay your full liability on time and no penalty, ie geared to unpaid tax but, as has been said, there will need to be a definite deadline date for submission. But there again where does HMRC draw the line? How many deadlines must there be?

The main issue from HMRC's view point is to improve their cashflow and empower collection, to improve their cashflow.

There is no real answer.

Thanks (0)
By sqwint
11th Jun 2015 14:48

I have mentioned this in another post here, but HMRC have told me that appeals sent to them in May wont be looked at until the earliest October. They said they have a warehouse full of skips chock full of appeal letters......

And with that knowledge, are still quite happy to escalate their debt collection process knowing there is an appeal but that they are too busy to look into it. Crazy


Thanks (1)
11th Jun 2015 16:57

I think Stephens analogy is wrong

 the shops have not overcharged nor has HMRC , it has nothing to do with that, but then again Stephen is always right ;-)  talk of an overcharge is plain  wrong 

Thanks (0)
13th Jun 2015 18:40


carnmores wrote:
the shops have not overcharged nor has HMRC , it has nothing to do with that, but then again Stephen is always right ;-)  talk of an overcharge is plain  wrong
I only used overcharging to follow up on your later price reduction analogy. My point is that everybody who suffered the penalty incurred it at the same time. With all other factors identical, why should some be cancelled and others not?

If you disagree with me, please put forward an argument why. The sarcastic "always right" comments are a cheap debating tactic that is just getting tiresome now. The implication is you're not withdrawing from the discussion because you have no argument, you're withdrawing from the discussion because you think I will stick to my belief however irrational. It's a bit insulting really.

Thanks (0)
11th Jun 2015 20:08

Amnesty etc
If you owe tax and fail to return you should have a problem.if you don't owe or are perhaps due a rebate,there should be a relaxation.but having lived in many countries,I think that views differ.
In the U.S. ,if you fail to return you get huge penalties and jail if you get it wrong.
In Australia many years ago there were no penalties if they owed you a rebate.this was further ratified when Paul k eating the then chancellor,effective and before he became pm,advised that he hadn't done his return for some years as he. Was too busy
Thus the keating rule was Bourne!

Thanks (0)
By Ammie
12th Jun 2015 15:29


I know nothing of the US system.

But, if that is their response and typical of their attitude on all matters it goes further to explain why an increasing population around the world despise them. And all this while murderers wander their cities.

But that's not relevant I know.

Thanks (0)
16th Jun 2015 20:46

Apologies for my last post. It had been a tough week, and I think I was feeling a bit touchy. Reading it again, I think I was reading too much into carnmores' post and it was only meant light-heartedly really.

Thanks (0)