Is HMRC softening its approach to late tax returns?
Or are you one of the 890,000 who were ‘a bit late’ and in receipt of a £100 fine from HMRC?
Did you know that if you appeal your fine, within HMRC’s broadened parameters of a “reasonable excuse”, the fine will probably be cancelled?
The Telegraph reported contents of an unofficially disclosed internal HMRC message, instructing staff about a new approach to late fines. It instructs them not to embark on investigations into appeals against late payment fines when they are evidenced with a “reasonable reason” – the fine is simply to be cancelled.
What is HMRC’s definition of “reasonable excuse”?
The list of reasonable excuses for late filing of a self-assessment tax return is now available on HMRC’s website. They include; fire, computer breakdown, delays to the post, having to stay in hospital and the death of a family member.
Some of these have always been considered “acceptable”, but there are some extras that would not have resulted in a fine being revoked before this change.
As Paul Lewis, of BBC4s ‘Money Box Programme’, wisely points out, “This isn’t an amnesty. If you filed late and you got a penalty and you haven’t appealed then you will have to pay. But if you appealed, and by now have filled the form in, then the chances are, the overwhelming majority…will be accepted.”
Are HMRC in the position to administer this new approach?
This is great news for the taxpayers involved, but another strain on the diminishing numbers of HMRC staff. The Telegraph report states that this has generated at least an extra 1 million letters of enquiry, with call centre staff drafted across in an attempt to wade through the workload.
Should people really be let off paying their fine?
Margaret Hodge, Labour MP and chair of the Public Accounts Committee, expressed her disagreement with HMRC’s stance on this to the BBC, “Most people will get tax returns in on time, so if HMRC says it is not going to pursue people who file late, it undermines the system. It won’t be seen to be fair. People can simply look down the list of excuses and pick one.”
HMRC’s viewpoint
A spokesperson for HMRC said that “Our penalty regime is intended to influence customer behaviour, but also be clear and cost-effective, fair and proportionate. The current way of managing penalties does not meet these objectives, and so we have decided to take a more proportionate approach…”
This allows them to concentrate resources “on investigating tax avoidance and evasion”, which is their currently stated priority.
In answer to arguments about fairness within the system, an HMRC spokesperson replied, “… no-one will be let off the fine unless they’ve now sent in their return and have a good reason for sending it in late.” They are not in the business of “…penalising ordinary people who are trying to do the right thing”.
