HMRC announced this week that it had received more than 11 million tax returns before the 31st January tax return deadline window slammed shut. However, the HMRC press release also said that nearly 1.2 million people had missed the deadline — a 10% increase on the number of taxpayers who missed the deadline last year.
Additionally the tax office reported that it had received 500,000 more returns than it expected before the 31st January. Whilst the full reasons are not yet known, it would appear that it is most likely due to the additional hundreds of thousands of people who have been pulled into self-assessment for the first time by fiscal drag.
Fiscal drag in essence means that rising wages and pensions, coupled with frozen personal tax thresholds have led to taxpayers having to pay the High-Income Child Benefit Charge, or they’ve been pushed into a higher tax banding, thus requiring them to file a return.
All late filers all face an automatic fixed late filing penalty of £100, which applies even if no tax is due or if the tax has been paid on time. Myrtle Lloyd, HMRC’s director general for customer services thanked the millions of taxpayers who met the deadline, saying: “Anyone who has yet to file and is concerned that they cannot pay in full may be able to spread the cost of what they owe with a payment plan.”
1m miss deadline: Who were so many people late?
Apart from the extra numbers of tax returns caused by fiscal drag, the major reason is, ‘surprise, surprise’ the dramatically reduced level of HMRC support and help for taxpayers’ queries, whether they be by email, letter and especially by telephone.
I have blogged regularly about the dreadful tax office’s record on telephone support, which deteriorated significantly during the recent self-assessment tax season. With HMRC placing restrictions on its helplines at the beginning of December, accountants struggled to get through to the agent dedicated line and therefore faced challenges in resolving more complex issues. It has also now emerged that the tax office reduced the number of staff available to assist with taxpayers’ queries by over 5% over the last 12 months.
1m miss deadline: Are accountants being targeted for blame?
As with previous years, HMRC saw an influx of last-minute taxpayers scrambling to file their tax returns on deadline day. This year 778,068 taxpayers filed on 31st January, with 33k leaving it to the final hour. HMRC also sent out thousands of email messages to accountants on deadline day asking them to urge their clients to complete their tax returns by midnight that day.
What on earth are we accountants are supposed to do with only hours left of the final day, beggars belief. In our case the reminder email was only received at 2.30pm on the day, far too late for us to do anything meaningful!
I may be getting cynical in my old age, but I strongly suspect that the emails were a less than subtle attempt by the Revenue to sow the seeds of blame on accountants when they inevitably have to face the Public Accounts Committee in a few weeks’ time to once again have to explain why their woeful performance had deteriorated even further!
Dawn Register, head of tax dispute resolution at BDO said, “The higher number of people being required to file a tax return for the 22-23 tax year is likely to have led to a rise in the numbers of people filing late. We would encourage HMRC to do more to support people to be compliant and get their tax right first time and not try to shift the blame on to others.”
1m miss deadline: A reminder of the potential penalties
For those who were late in filing their tax returns and do not have a ‘reasonable excuse’ with which to appeal the late penalties, they may also be caught out by more than just a £100 fine.
HMRC state that a 5% penalty applies to unpaid tax at 30 days, 6 months, and 12 months, with interest also charged on late tax payments. Late payment interest charges are standing at a historical high of 7.75%, so if you were late sending in your return, do so before 1st March to ensure you only incur the £100
Tax Accountant’s view
Todays’ Blog will not have come as a surprise to the regular readers of my Blog and is merely the latest chapter in my commentary on the steady deterioration of HMRC’s service levels.