Computer Says No
We’re now deep into the Tax Return season and I’m frustratingly finding that there are still a number of Tax Returns that can’t be filed online.
It happens every year, you are under pressure to get those last few Self-Assessment Tax Returns in to HMRC, when suddenly your tax return software spits out an error message: “Not able to file online.”
The air turns several shades of blue, but what can you do? If you submit the tax return in paper form now your client will get a late filing penalty.
Amazingly, there are still 30 plus different sets of circumstances, when the HMRC system will refuse to accept the data from Tax Returns filed online, irrespective of the software used to compile the return.
As Usual the MP’s have the best Deal
It is well known that Tax Returns for MPs can’t be filed online, so a paper return must be submitted, but the MPs are given until 31 January to get their return to the specialised HMRC office which deals with their returns. The same digital restriction and extension of filing period applies for members of the Scottish Parliament, Welsh Assembly and Northern Ireland Assembly – all the in name of increased security.
In other cases the HMRC system has not been programmed to cope with all the little foibles of the UK tax system, so it throws up a computation error and rejects the return.
- A woman gets married and changes her name part way through the tax year, but as far as HMRC’s computer system is concerned, she’s still a Miss
- Taxpayers in an IVA arrangement Customers will have their records dealt with under separate arrangements, so even though this has been arranged by HMRC, their unique taxpayer reference will not be recognised by the system
- Where a taxpayer is due a refund because of an adjustment to an earlier year that’s not been coded correctly through PAYE
- When the Tax Return has multiple of schedules attached
- A taxpayer has pre-incorporation losses and other losses or loan interest which collectively exceed the statutory cap of £50,000
- A non-resident taxpayer has made Gift Aid donations, but has paid insufficient tax in the year to cover the Gift Aid
Most of these scenarios do not involve huge amounts of tax nor highly complex calculations and most of them could and should have already been subject to an amendment to HMRC’s software. Take my first example, there must be tens of thousands of name changes in a year, but HMRC’s magic box of tricks still classifies them as unusual or complex events.
When we come up against one of those situations where the computer say “no”, the only way forward is to submit a paper tax return. But to avoid an automatic late filing penalty you need to supply HMRC with a reasonable excuse, which would you believe, is the fact the HMRC can’t programme their systems correctly!
In order to escape the fine you’ll need to prove you can’t file online so you’ll need to print out the error message supplied by your tax return software, or copy that message into box 6 of the special HMRC reasonable excuse form. See:https://www.gov.uk/government/publications/self-assessment-reasonable-excuse-for-not-filing-return-online
The best approach is to submit this reasonable excuse form attached to the paper tax return, having clearly marked it with you name and UTR number, but whatever you do, remember in all cases the tax return must reach HMRC by 31st January.
David Jones is the Senior Partner and Founder of Morgan Jones & Company. Born in Liverpool and an Accountancy graduate of the University of Wolverhampton, David spent twenty years working for the Customs & Excise in London then Shrewsbury before starting his own business. David's depth of knowledge of the UK tax system and his ability to communicate this learning has seen Morgan Jones & Company grow into Shropshire's most respected Accountancy Practice.