HMRC delays sending self assessment penalty notifications

Brexit-related pressures mean HMRC is to delay sending out notification of self assessment penalties for late filing of tax returns this year, as part of its contingency plans and to ensure there is capacity in its call centres for queries relating to the UK’s withdrawal from the EU

More than 11.5m taxpayers were required to file by midnight on 31 January, and a total of 93.68% did so, a new record according to HMRC. However, 731,186 taxpayers missed the deadline.

In its latest agent update, HMRC says as part of EU exit contingency planning, it has decided to make a change to the timings for sending notification of self assessment £100 penalty notices to late filers, which are normally issued in February.

HMRC notes: ‘This creates considerable demand into our call centres and back offices, as customers contact us to consider their options.

‘This year, we expect an increased demand in our call centres as the UK leaves the EU, so we intend to delay the issue of these notices to ensure we can provide the best service to our customers.

‘This will release those staff for EU exit related work.’

HMRC says individuals who filed late will still be charged the penalty; but the notice will be delivered later than normal. It will issue daily penalties to individuals who have still not filed three months after the deadline, in appropriate cases, at the normal time.

The latest date that the notices will go out is the end of April, but they will go out sooner if the withdrawal agreement is agreed.

However, ATT has raised concerns about the delay, pointing out that the £100 penalty notice is an important prompt to taxpayers that their return is outstanding as well as reminding them that they risk incurring an additional penalty of £10 per day if the return is still outstanding after three months from the 31 January due date.

ATT is concerned that if the penalty notices are not received until late April or into May, the £10 daily penalties will be unavoidable. It is also seeking clarity over HMRC’s statement that daily penalties will be issued ‘in appropriate cases’ and want to know whether this will take into account the late issuing of the £100 penalty notice.

Jon Stride, co-chair of ATT’s technical steering group, said: ‘We are concerned that the delay in issuing penalty notices may give taxpayers who haven’t filed their 2017/18 tax returns a misplaced confidence that they will either avoid any penalty or, at worst, incur only the fixed £100 penalty.

‘In fact, if the £100 penalty notice is issued by HMRC at the end of April 2019, a taxpayer may (by the time the notice hits their doormat) already be incurring additional penalties at the rate of £10 for each day starting from 1 May 2019.

‘Those £10 daily penalties will continue until their return is filed online. If that takes until, say, 21 May, that would amount to another £200 of penalty – even if there is no tax outstanding.’

ATT’s advice is that anyone who has yet to file their 2017-18 tax return should do so as a matter of urgency. While they will not be able to avoid the £100 penalty unless they have a reasonable excuse, getting the return filed online no later than 30 April will mean that they will avoid the additional £10 per day.

The penalties for late tax returns start with an initial £100 fixed penalty, which applies even if there is no tax to pay, or if the tax due is paid on time.

This is followed after three months by, additional daily penalties of £10 per day, up to a maximum of £900; after six months, a further penalty of 5% of the tax due or £300, whichever is greater; and after 12 months, another 5% or £300 charge, whichever is greater.

HMRCAgent Update 70 is here.

Report by Pat Sweet

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