HMRC’s Tax Return penalty

You may have read or heard on the news this last week about HMRC’s recent decision not to charge a penalty for people despite their tax return being submitted late.

What’s it all about?

The law provides for an automatic penalty of £100 if a personal tax return is even a day late (it is more than this if it’s more than 3 months late). But no penalty is due if you have a “reasonable excuse” for the delay. You can appeal within 30 days of the issue of the penalty, using form SA355.

So what’s changed?

Almost 900,000 people didn’t file on time this year but HMRC don’t have the resources to investigate everyone who claims to have a reasonable excuse. So they have decided that “in the majority of cases we will be accepting the customer’s grounds for appeal, and we can cancel the penalty”.

This applies only to late filing of the 2013/14 tax return and only once the tax return has been filed.

However, this is not an amnesty – you must be able to provide a reasonable excuse.

What’s a reasonable excuse?

HMRC lists what they think does or doesn’t count as a reasonable excuse here.

I’ve received a penalty demand more than 30 days ago so the time limit for an appeal has expired. Am I too late to benefit from HMRC’s change of heart?

You could ask to make a late appeal. HMRC have not said anything about how they’ll approach late appeals.

If HMRC say they aren’t checking, what’s to stop me selecting a “reasonable excuse” at random and putting it on an appeal form?

That would be dishonest and illegal: so we don’t recommend it.

Sorry: No.

What’s the point of having a penalty regime if you don’t enforce it?

You’ll have to ask HMRC this.