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.
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.”
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.”
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.
About Rebecca Cave
Consulting tax editor for Accountingweb.co.uk. I also co-author several annual tax books for Bloomsbury Professional and write newsletters for other publishers.