“No fine for late taxes” was the misleading front page headline In The Sunday Times on 10 January 2021.
The report doesn’t include a source but it would seem to be a letter that was sent by Jim Harra, CEO of HMRC, to 6 accounting bodies on 18 December 2020. We featured this is our weekly topical tax tips on 7 January.
That letter includes caveats clearly intended to avoid exactly the type of headline that appears in The Sunday Times. Specifically it says: “We do not want to complicate this message by sending a blanket signal that it’s OK to file late”.
The Sunday Times article also seems to confuse penalties for late filed tax returns and late paid taxes.
Our advice to accountants last week, before the ST article appeared:
The 2019/20 tax return filing deadline remains at midnight on Sunday 31 January, and automatic £100 late filing penalties will be issued by the HMRC computer for any tax returns received after that point.
However, all penalties can be appealed. HMRC has confirmed, in a letter to the professional accounting bodies, that the period in which an appeal will be accepted has been extended to 90 days. That appeal period runs from the date the penalty notice is issued, not from the date it arrives with the taxpayer.
All taxpayers who have accessed their online Personal Tax Account (PTA) will have consented to receiving all communications about self-assessment from HMRC in digital form, so don’t expect a paper penalty notice to always arrive in the post. You will need to prompt your client to look for penalty notices from HMRC on their PTA.
Taxpayers can appeal against a penalty notice using the online service, by logging into their Government gateway, but tax agents need to appeal using the paper form (SA 370).
In order to appeal successfully you need to include a reasonable excuse to why the tax return was late. This reasonable excuse needs to be in place for the period in which return should have been submitted and the delay after the submission deadline. HMRC expect the return to be submitted as soon as the factors that contributed to the delay have dissipated.
HMRC is prepared to accept covid-related personal or business disruption as a reasonable excuse, and this will include disruption to the tax agent’s work as a result of the pandemic.