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Taxpayers left in the dark over penalties

25th Feb 2019
Tax Writer Taxwriter Ltd
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HMRC is to delay sending out late filing penalty notices to taxpayers who failed to file their self-assessment tax return by 31 January, until April 2019.

Bad news buried

Around 700,000 taxpayers failed to meet the 31 January 2019 deadline for filing their 2017/18 tax return, so they are due to receive an automatic £100 late filing penalty. The letters informing taxpayers that this penalty has been charged are normally issued in February, but this year HMRC will not start the process of issuing those penalties until April 2019.

HMRC released this vital information on page 3 of Agent Update issue 70.  

Penalty farming

The £100 penalty will still be due, but the taxpayer won’t know that they have been charged. It is not clear whether the taxpayer’s online personal tax account (PTA) will show the late filing penalty, but tax agents can’t view the PTA on behalf of their clients, so it is difficult to check this.    

HMRC says the latest date that late filing penalties for 2017/18 tax returns will be issued is 30 April. But a letter from HMRC can take over a week to arrive, so the taxpayer may not realise that their tax return hasn’t been recorded as received by HMRC until well into May. Many taxpayers will also be away on holiday in late April due to the Easter bank holidays.

If a SA tax return is over three months late, ie not logged as received by HMRC by 1 May, daily £10 penalties are charged for every additional day the return is late, until the return is six months late. Then another automatic late filing penalty is issued, at the rate of £300 or 5% of the outstanding tax, whichever is the greater sum.

Some taxpayers may not be aware that their tax a return has not been received by HMRC until the penalty notice arrives. There can be technical problems with online filing which means the electronic tax return is held in suspension as the “submit” stage has failed. Taxpayers can also be let down by the tax agent who has been appointed to submit the return.  

Jon Stride, co-chair of ATT’s technical steering group said: “We are concerned that the delay in issuing penalty notices may give taxpayers who haven’t filed their 2017/18 tax returns a misplaced confidence that they will either avoid any penalty or, at worst, incur only the fixed £100 penalty.”

Brexit excuse

HMRC has admitted the delay in issuing penalty notices is due to lack of adequate resources within the department. A decision has been taken to free up call centre staff to deal with calls relating to the UK leaving the EU.

HMRC said: “This year, we expect an increased demand in our call centres as the UK leaves the EU, so we intend to delay the issue of these notices to ensure we can provide the best service to our customers. This will release those staff for EU Exit related work.”

Prior knowledge

An HMRC spokesman told the BBC: "The vast majority will be aware they missed the January 31 filing date, as we do remind regularly with nudge messages before the deadline.”

HMRC has known about the Brexit date of 29 March 2019 for almost two years, but it has failed to plan to have adequate resources available to deal with an expected surge in enquires from its customers. However, taxpayers are penalised if they fail to meet the tax return filing deadline.   

Replies (20)

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By BigMuz
25th Feb 2019 14:42

Not enough staff to deal with basic tasks such as sending out letters whilst also bringing in huge changes to the way people must submit their VAT Returns.

The next few months trying to contact HMRC about anything is going to be a nightmare! even today I tried calling and got the we are too busy goodbye message

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Replying to BigMuz:
Tornado
By Tornado
25th Feb 2019 15:13

You must be wrong here. HMRC are adamant that mandatory MTD for VAT will be going ahead on the 1st April 2019, so they must have enough staff to deal with all of this.

(Of course they do not, and this pretence that MTD for VAT is on course will be blown apart in a very short time from now. Perhaps it will be voluntary, but no way will it be mandatory).

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Replying to Tornado:
By djn24
27th Feb 2019 11:55

Tornado wrote:

You must be wrong here. HMRC are adamant that mandatory MTD for VAT will be going ahead on the 1st April 2019, so they must have enough staff to deal with all of this.

(Of course they do not, and this pretence that MTD for VAT is on course will be blown apart in a very short time from now. Perhaps it will be voluntary, but no way will it be mandatory).

Do you really think that MTD will be delayed or made voluntary with only a few weeks to go?
I wish you were right but I honestly can't see that happening.

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Replying to djn24:
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By leon0001
27th Feb 2019 12:09

But the rules have already been softened for the first year. Traders may use cut and paste from their spreadsheets into filing software.

Of course, how they can tell that the figures have not been re-keyed is not revealed.

I would not be surprised if this relaxation becomes permanent.

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Replying to BigMuz:
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By DaveyJonesLocker
25th Feb 2019 16:13

In just a few weeks our Government fell us we will have left the EU and MTD for Vat is starting.
And we're told it's only North Korea who put out propaganda.

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By AnnAccountant
25th Feb 2019 16:47

Didn't HMRC get rapped a few years ago for only contacting RTI users (or was it something else? I forget) about penalties once they had got up to a high figure - rather than risk the taxpayer putting things right earlier and paying a small penalty? Similar strategy here?

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Replying to AnnAccountant:
By Nick Graves
27th Feb 2019 10:49

I think it's happened with just about every LFP I can think of - PAYE/Subbies/Partnership Returns, etc...

Any excuse to spank a 3 large invoice in the post and say it's all the taxpayer's fault.

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By Malcolm Veall
25th Feb 2019 21:40

So presumably not having enough staff to complete a tax return because they were deployed to other work will be a reasonable excuse for filing a Return late?

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By GHarr497688
25th Feb 2019 21:50

The words NATIONAL DISGRACE and NEGLIGENT come to mind. We get one month to prepare for MTD and they get two years and still can't cope ! Very fair.

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Replying to GHarr497688:
Tornado
By Tornado
25th Feb 2019 22:37

More like NATIONAL INCOMPETENCE

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All Paul Accountants in Leeds
By paulinleeds
27th Feb 2019 10:30

I would have expected that these £100 penalties would go out automatically from the computer, without human interaction or rekeying of taxpayers' data!

Why do we not have 100% 'digital-links' from start to issuing of penalties!

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Replying to paulinleeds:
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By johnjenkins
27th Feb 2019 10:38

Haven't there been a couple of FTT's that have gone against a penalty as it was an automatic issue? Perhaps HMRC are being a bit more careful, but then again are they going to look at 700,00 penalty notices.

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Replying to paulinleeds:
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By mikebrooks
27th Feb 2019 10:52

100% digital-links...? Great idea.

If only they'd thought of that for MTD for VAT. Oh, hang on.... :-(

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Replying to paulinleeds:
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By richard.snape
27th Feb 2019 14:21

Perhaps it's not issuing the notices they are concerned about, but having enough call centre staff available to deal with the resultant phone calls. Then again offering an awful telephone response doesn't usually seem to bother them.

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Replying to paulinleeds:
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By dgilmour51
27th Feb 2019 16:28

"without human interaction"
...forbidden by GDPR I believe.

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By SJH-ADVDIPMA
27th Feb 2019 10:41

I'm for no deal, lets have a clean break.

Thanks (4)
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By Ben Alligin
27th Feb 2019 11:06

If Brexit is delayed, will this add a further delay to the HMRC notices? !

Presumably the staff currently unable to process the penalty notices due to dealing with Brexit issues, are booked to return to this pending job post Brexit. Therefore if Brexit is delayed how are the notices going to go out in April?

Is Alistair Campbell now working for HMRC?!

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By Ammie
27th Feb 2019 21:17

Let’s not get to excited. It’s always been a power of HMRC to do as they please, they have few obligations to meet any timescales and any they state are always open to their discretionary change.
They are a fractured organisation who are edging towards full automation with little or no input from people. The problems have barely started.

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By Mr J Andrews
05th Mar 2019 10:03

So, HMRC advise a delay in issuing { penalty } notices ......to ensure they can provide the best service to their customers. An oxymoronic - or moronic - statement if ever there was.
Please everyone , follow my example. If I get anything less than good service to my clients from HMRC , I always ask for a written explanation as to what went wrong , for a written report to my client and consideration of some monetary compensation for the inconvenience.
Amazing how often call centres will advise how staffing cuts have led to the current pathetic,abysmal HMRC service.It would be good to see the full text of the '' inadequate resources '' mentioned in Rebecca's article.
You may argue, my approach to HMRC compounds their internal problem; but how else do you tackle a brainless beast with no teeth ? It ain't going to get better under this current hierarchy.
I daresay my window cleaner will turn up one day asking to borrow my ladder and cleaning equipment.....

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Replying to Mr J Andrews:
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By johnjenkins
05th Mar 2019 10:20

If I thought for one moment your method would change the way HMRC/ Government operate I would do likewise. However since Gordon Brown took over I have witnessed a steady decline in HMRC to the point at which I strongly believe they have no credibility whatsoever. This is very sad as I remember the days when an investigation was exactly that (because something was wrong) and not fishing expeditions when all that is caught is a cold.

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