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Tax penalty U-turn: Agents unimpressed

It’s happened – HMRC has listened to the outcry from accountants and waived SA late filing penalties until February. But is this progress?

28th Jan 2021
Community Assistant AccountingWEB
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After months of pressure from overworked accountants, HMRC has decided to waive the late filing tax penalty fees, as long as the tax report is filed before 28 February.

The announcement came just days before the SA filing deadline.

This has come as a shock to many after HMRC refused to respond to the pleas for an extension for months. ACCA’s Glenn Collins called to extend the deadline until the end of the tax year in a letter to HMRC only earlier this month.

Over the past few months, accountants have become increasingly swamped with SA work; the ongoing pandemic and the third national lockdown measures, which have forced many to homeschool as well as work from home, has exacerbated what is already an extremely stressful time.

There has been some speculation as to the reasons behind the late filing fee announcement, particularly after they refused to do so.

“I guess this is for HMRC's benefit rather than tardy taxpayers. Now they won’t have to allocate resources to deal with appeals against late filing penalties citing the pandemic as a reason,” said AWEB member pauld. “It’s of no real benefit to accountants.”

“This seems like a move to try and prevent HMRC from being even more overwhelmed than they already are,” agreed member Sparkly, “than offering us any kind of a break!”

Concerns from the community

While February is usually a welcome rest for accountants after the hectic days of January, there is concern that the penalty extension could cause a snowball of work into the coming month.

An overwhelming amount of frustration has been voiced from members of the AccountingWEB community:

Unacceptable. Unsupportive. Unappreciative. This is the low point in my relationship with HMRC over 22 years.” said AWEB member norstar. “We have worked mornings, afternoons, evenings and Saturdays to get our clients done on time. Now this. A kick in the teeth.”

“I think it's a disgrace, extending the SA deadline at such short notice when the panic is just about over,” commented member Gillian Black. “I don't think HMRC realises the pressure they are putting on us accountants and book-keepers.”

The announcement was also not exactly an extension of the deadline as requested, but rather a waiver on late filing penalties: “The pressure really is still on as you still need to do tax calculations to provide clients with estimates of tax to pay before 31 January,” said member Jimess.

“One of my clients refused to accept that it was just the penalty waiver yesterday after reading about it in the press and I had to e-mail the HMRC notice I had received to convince my client otherwise,” they continued. “We now have to battle with misconceptions about what the penalties concession actually means for clients.”

Taking some of the weight off the SA strain is undoubtedly a welcome respite, but for some,` it’s just too little too late from HMRC.

AWEB reader bondss also voiced Covid-19 safety concerns: “Had this decision been made at the appropriate time (before Christmas) it would have enabled us to plan the month of January in a way which ensured that our staff are not putting themselves in danger and are able to work from home.”

There has been some anxiety over the announcement encouraging clients to just submit their information later than they would originally have, causing more pressure for the accountant having to chase the work into February.

“All this does is encourage the usual last minute crowd (nothing to do with Covid) to be last minute at a later date,” said AWEB member LukeS.

“Frankly I'm a bit cross that they won’t now get a fine because it might just have taught them a lesson,” commented member Cathro.

Positive progress

Some accountants, however, have been focusing on the positive aspects of the extension.

“If they had made the announcement a month ago then last minute clients would have just taken another month and we would have had another rush of tax returns at the end of February, so I would rather take the pain now,” argued user jon_griffey. 

Many accountants were debating whether an earlier announcement would have helped matters, or whether the workload would have simply shifted.

“Whilst HMRC could have handled this better, had they announced this 4th Jan it would have meant all the time pressure on clients would have evaporated making accountant's jobs much harder,” commented member ireallyshouldknowthisbut. 

“I think it is the right decision, even though it is at the 11th hour so to speak,” agreed member Refs1. “Being a small practice of seven of us, when two staff rang in ill this morning, it relieves a lot of pressure.”

After such a stressful year, making the best of a bad situation seems like the only option: “If it had been announced earlier, folks here would have been up in arms about clients taking advantage and leaving it until the last week of Feb to hand their records in. As things stand, the majority of agents and taxpayers will have been working to the usual deadline,” commented member Wilson Phillips. “At least we now have some breathing space to deal with the genuine stragglers.”

Tune in to our Any Answers Live Webinar on 1 February, what would have been the day after the deadline, where our panel of experts will be discussing all things self assessment, including the ways in which you can rebound from a tumultuous year. 

Replies (10)

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By Open all hours
28th Jan 2021 20:41

The half hearted and quite late announced changes were as expected.
For the record, when was the last time HMRC actually did anything to show that they value the role agents play in keeping the tax regime on the road?

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By Paul Crowley
28th Jan 2021 21:25

Completely and utterly not the case.

HMRC recognised that they would completely fail in coping with 1 Million appeals, all in paper

Nothing to do with taxpayers and the accounting bodies

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By KateR
29th Jan 2021 10:44

I had to phone HMRC with a query yesterday (yes actually managed to get through to a person) and was told that the first ordinary officers knew about the waiving of late filing penalties was when they saw it in the media. They went on to have real rant about the way things are run, made a change not to be the one with the grievance . Guess it is not only accountants that the high heid yins at HMRC have no respect for.

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By markabacus
29th Jan 2021 13:06

Whilst I'm no supporter of HMRC, 46mins in a call queue last week as there is no agent line, I don't think they were going to win either way.

Extend to say 31st March and some of us complain our clients will just turn up last week of March instead of Jan which then has a knock on effect ot our other work.
Don't extend and some of us complain of the pressure

Whilst we don't have the volume of tax returns that some of you have I'm the only 1 in our small practice that does the accounts and tax work so effectively a 1 man band. It's been a tough year for us all and I started the tax season already worn out from supporting our client's and their businesses as well as the 'normal' work.

I work from home anyway, so I've hardly been out for months, hardly seen our grandchildren who live 5 miles away instead of weekly and since Dec 27th have barely left my desk including weekends but today as of an hour ago my last client tax rtn was emailed for approval, a handful or so pending sign off to submit. This of course excludes mine and my wife's which I now must start.

I was expecting the extension to be announced Weds/Thurs and I didn't broadcast it to clients.

Like us all I'm very tired but on the upside I can broadly have a day or two off i.e. the weekend to relax and celebrate my 66th birthday that was on 11th Jan which I spent working and look forward to Feb 1st as I do every year with it all behind me.

Oh and the 6 nations rugby next week :-)

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Morph
By kevinringer
29th Jan 2021 13:09

HMRC haven't extended a single deadline since the pandemic started so there was no precedent for the SA easement. Because so many might slack-off once an easement was announced, HMRC needed to do it later rather than sooner. I knew from my forecast that I'd be doing OK until the last 10-14 days when my numbers would fall away. And this is exactly what has happened. It is the fall in numbers that HMRC quote in the letter to the PBs that led to HMRC making the decision. Though the thought of handling a million appeals no doubt had its part to play. So, from a compliance point of view I reckon HMRC did it at the right time, for them. But there is one aspect where they have been irresponsible. The pressure on accountants has been huge and though many office-based staff have been home working, they've felt compelled to return to the office because they can get things done quicker there. That means offices may not have been as covid-safe as they should have been. And therefore in some office somewhere, someone is going to catch it. This pressure was entirely HMRC-induced and HMRC were aware of it but chose not to act until early this week. That is irresponsible.

As for me, I am very grateful that HMRC have announced this easement. I was working crazy hours before the announcement and will continue to work crazy hours until I'm done. But being 2-3 months behind at one point because of client covid support, my crazy hours these last six months mean I'm catching up and should finish mid-February. Then I might have an evening off. Such indulgence. Oh, silly me, I forgot we'll then have the reverse charge starting in two weeks and I've got loads of clients to bring up to speed on it. Oh well, I'll get an evening off in March instead.

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Replying to kevinringer:
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By Paul Crowley
29th Jan 2021 15:02

HMRC and clients failed at all times to recognise that a solid 3 months of the available 10 months just got lost this year
Children and shielding and isolating meant 3 months of only three people on an increased workload covring the missing and the HUGE CJRS thing that just woyld not stop

My business partner only lost 1 month, but he does not get involved in supervision, admin wages etc
HE was probably not in any position to worry about this

I recon I lost 40% of the time I would be effective over the 10 month operating year

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Jennifer Adams
By Jennifer Adams
31st Jan 2021 18:24

One thing I love about Accweb is the realisation that you're not alone.
I've also been working crazy hours and the last few months have taken their toll.

Currently I have loaded a standard email response to all contacts saying basically - 'leave me alone!' and explaining that their reminding me by phoning, texting, emailing wont get them their return any quicker. Even if payment is late for many the interest will be in pence.

If they are that worried they can always pay an estimated figure.

HMRC's announcement had nothing to do with us - as OpenAllHours says - HMRC do not appreciate how much we assist them in their job.

Paul C is right - it was all about their potential workload with Appeals.

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Replying to Jennifer Adams:
Morph
By kevinringer
31st Jan 2021 19:35

Yes the interest will be pence unless you owe a lot of tax in which case you can afford it. The only problem cases are voluntary C2NICs which need to be paid. I've got a lot of clients with very variable profits and potentially voluntary C2NICs so I got in touch with them and told them to pay, and I filed a provisional tax return. I'll deal with the remainder next month.

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By semoore
01st Feb 2021 10:40

Like others I have been working crazy hours and then to add to the problems HMRC kept saying I was not authorised to pull through the information from HMRC regarding salary and pension for my clients. I kept trying to renew the connection but to no avail. I rang HMRC technical support on Friday after a week of trying to initiate a web chat. At the second attempt I spoke to a person and explained the problem. He checked my credentials and agreed I was authorised but he could not see what was causing the problem He put me on hold in order to speak to his line manager. He then came back and said HMRC were no longer providing this information to agents, not just me but all agents. I asked how this squared with MTD for income tax and I was told I needed to get the information from my clients. It was SELF assessment after all!
I have since had it confirmed by the lovely people at btc and ICAEW that this is not the case and HMRC will continue to provide the information. I post this in case any other readers are being fobbed off by HMRC when they are unable to provide a proper solution to the problem.

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By djtax
05th Feb 2021 16:00

The concession re late filing penalties is welcome though there may well be some who still do not get returns in by 28 Feb. I am thinking in particular of those NHS staff (a number of whom are in the SA system) who have been working all hours in the COVID wards. What is the likelihood some of them will still not get their returns done by 28 Feb? Yes they probably have a good case to appeal any penalties but I await the national outcry and newspaper headlines in March re 'HMRC penalties issued to our NHS Heroes fighting on the front line against COVID'....

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