No HMRC penalty on late tax returns, really?

At the weekend you may well have seen the headlines regarding HMRC’s leaked internal memo stating that there will be a reprieve for thousands of people from the £100 penalty for the late filing of self assessments tax returns.

This is obviously welcome news to the 890,000 individuals who will theoretically benefit from this, but is not quite as generous as it may appear. As ever it is important to read the small print…….

Firstly it is only for returns in respect of the year to 5 April 2014.

Secondly, you need to have lodged an appeal already.

Thirdly, you needed to have filed the return before the end of April 2015 in the case of online filing.  After this period the £100 penalty actually increases by £10 per day up to 90 days.

And finally, the actual wording of the HMRC memo does not say all such penalties will be foregone, but that they will be accepting the excuses given in the vast majority of cases.

In the past HMRC have published details of the oddest excuses:

“I’ve been cruising round the world in my yacht, and only picking up post when I’m on dry land”  (South East man).

I’m sure this guy could afford the £100 penalty! Given that HMRC claim that the penalty will be waived in most cases, cruising around the world has suddenly become less stressful.

Or my favourite…

“I’ve been too busy submitting my clients’ tax returns” (London accountant)

I hasten to add, that was not anyone at Barnes Roffe.

It was also very interesting that the memo mentions that the vast majority of appeals were successful.  A few years ago, a colleague of mine published a blog mentioning how difficult it was to get a successful appeal.  How times have changed in this regard.

Just to round off here is a reminder of the late filing penalty regime for self assessment tax returns currently in force:

Up to 3 months late £100

After 3 months, £10 per day up to 90 days.

After 6 months, the greater of 5% of the tax due or £300.

12 months, same as 6 months unless deliberately withholding the return.

Deliberately withholding the return after this time, 70% of the tax due (min £300).

Deliberate and concealed withholding of the return more than 12 months £100% of tax due (min £300).

Interest is also charged on late payment of the tax due.

So, the headlines suggesting a £100 reprieve are not incorrect, but the whole process is not as straightforward as it may appear. In the words of Mark Twain “If you don’t read the newspaper, you’re uninformed. If you read the newspaper, you’re mis-informed.”

Talk to Barnes Roffe today
Share this page:
Contact Us
ICAEW The Chartered Institute of Taxation ACCA IPG IR