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Please click me to find the best excuses that HMRC have had

Nearly 1 million people were issued with a £100 fine for failing to file their online tax returns on time 3 months ago, but now HMRC are planning to let most of them off having to pay the fine.

But the penalty has only been waived for individuals who provide a “reasonable” excuse for being late.The development was disclosed to the Daily Telegraph, via a leaked memo and around 890,000 people could now be let off the hook.

A spokesman for HMRC said it wanted to focus more resources “on investigating major tax avoidance and evasion”.

The Telegraph report says the internal memo asks tax officials to remit fines without further investigation for those people who could show mitigating circumstances and who appealed against the fine after their tax return was sent in.

HMRC backlog

HMRC is facing a backlog of over one million letters and hundreds of staff have been taken off call centre duties to work through the mail, according to the leaked memo.

The Telegraph quotes the memo as saying: “Our penalty regime is intended to influence customer behaviour, but also to 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 where a customer has filed their return late, and then appealed against their penalty”.

The memo went on to say, “This means that in the vast majority of cases we will be accepting the customer’s grounds for appeal, and we can cancel the penalty.”

HMRC list of excuses

On its website, https://www.gov.uk/tax-appeals/reasonable-excuses HMRC state that in their opinion a reasonable excuse is normally something unexpected or outside your control that stopped you meeting a tax obligation. The excuses that it regards as reasonable include:

  • Your partner (or a close family member) died shortly before the tax return or payment deadline
  • You had an unexpected stay in hospital that prevented you from dealing with your tax affairs (anecdotally this has been widened to include of pretty well any illness, short of the common cold)
  • Your computer or software failed just before or while you were preparing your online return
  • You had service issues with HMRC’s online services
  • A fire prevented you from completing your tax return
  • Postal delays that you couldn’t have predicted

Paul Lewis, the presenter of BBC Radio 4’s Money Box programme, said the list was “quite broad” and included reasons officials originally said they were unlikely to accept.

“This isn’t an amnesty. If you filed late and you’ve 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.”

Paul Lewis

He said the move coincided with a fall in the number of staff at HMRC. But the Money Box presenter added the HMRC does appear to have been successful in its aim of increasing overall receipts by concentrating efforts on “serious tax avoiders”.

Former chair of the Public Accounts Committee, Labour MP Margaret Hodge

Former chair of the Public Accounts Committee, Labour MP Margaret Hodge

The former chair of the Public Accounts Committee, Labour MP Margaret Hodge, suggested the rules had been brought into “disrepute”.

She told 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 which won’t be seen to be fair. People can now simply look down the list of excuses and pick one.”

‘We’re the Good Guys’

A HMRC spokesman claimed that their reputation in the public’s eye for being hard-line and unreasonable was grossly unfair and stated that they had “always accepted” those with a reasonable excuse should have a penalty waived, and it was now “expediting that process”.

A statement added:

“We’ve been clear we want to focus more and more of our resources on investigating major tax avoidance and evasion rather than penalising ordinary people who are trying to do the right thing. But 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.

“This is part of our planned approach to penalty appeals, particularly for small businesses and individuals who have sent their tax return in late.”

HMRC spokesman

Even more good news from HMRC

A number of HMRC staff have privately admitted that they have been instructed to accept any appeal if at face value, the excuse seems a reasonable one. The have even been instructed not to ask for evidence nor take any further action and just waive the fine.

So any of you out there that have sent in your Tax Return late and have been fined, grab the opportunity while it lasts and get your appeal in now. The form to do this can be downloaded in pdf format at:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/354411/sa370.pdf

 

Image of David Jones Shrewsbury Accountant and Founder of Morgan JonesIf any of you would like more detailed information on any aspect of UK Tax Returns, send me an e-mail and I’ll be pleased to advise further.

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