HMRC waives £100 penalty for late SA returns

The tax department is planning on a waiver of the £100 penalty for late filing of tax returns, if a taxpayer can provide a ‘reasonable’ excuse

The details of the waiver however emerged from a document leaked to the Telegraph.

The implication of the decision means that up to 890,000 taxpayers may be able to avoid paying the fine for missing the filing deadline since tax officials will now no longer check why an individual could not submit their self assessment filing on time provided the official considers their excuse to be ‘reasonable’.

The department is already considering suggestions to scrap the £100 penalty altogether, with potential new rules which will instead calculate tax owned on higher interest rates, so as to trigger swifter settlement of tax owed by individuals.

According to the paper, HMRC’s internal memo told tax staff to dismiss the £100 charge without further inquiry if individuals with mitigating circumstances appealed to the tax department following payment of tax due.

‘Our penalty regime is intended to influence customer behaviour, but also be clear and cost effective, fair and proportionate,’ the memo said.

‘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 ... 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.

‘The time we save will allow us to work higher priority post,’ the document said.

‘Overall, it will help provide a better service from HMRC for all our customers.’

The moves come as HMRC is understood to be inundated with millions of taxpayer letters, so much so that staff have been pulled off call centre work to sift through mail.

Records also leaked to the Telegraph show HMRC was dealing with 827,203 in the early part of May.

‘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,’ an HMRC spokesman said.

HMRC said that reasons for late payment that it can accept include the death of a family member, an unexpected stay in hospital, fire, computer failure or unpredictable postal delays.

Unacceptable excuses include reliance on another individual to file/send a return, a bounced cheque or failed payment due to insufficient funds, difficulties with using HMRC’s online system or a lack of a reminder from HMRC.

Penny Sukhraj |Content editor, Accountancy - (up to 2016)

Penny Sukhraj, former content editor and writer for Accountancy and Accountancy Live, responsible for commissioning and editing news...

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