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?
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.
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.