The Daily Telegraph - Saturday - Money
One in three escapes late tax return fines
Nearly one in three taxpayers who faced penalties for filing their tax return late has avoided paying fines, saving more than £1bn in charges, Telegraph Money can disclose.
Thousands have won reprieves from the taxman, with many complaining about flaws in HM Revenue & Customs’ processes and systems.
Figures obtained by this newspaper under Freedom of Information requests showed that almost four million people failed to submit their tax returns on time between 2012 and 2018. HMRC issued 14 million penalties, including some for historic tax returns filed in previous years, over the period.
The charges totalled as much as £5bn, but savvy taxpayers were able to convince HMRC to waive about five e million fines and the taxman ended up with only £3.5bn.
Separate figures showed that the tax office received more than 70,000 complaints from disgruntled taxpayers last year. A quarter related to issues with HMRC systems.
The disclosures come just a week before the Jan 31 deadline to declare your tax affairs for the 2018-19 tax year. The deadline coincides with Britain’s departure from the EU.
Tax experts have said there could be more fines for late submissions this s year if government departments are distracted by Brexit and systems fail to cope with the extra workload.
Mart Abramov of TaxScouts, a software firm, said: “This year the self-assessment deadline coincides with the date that Britain will be leaving the European Union. Brexit could cause a backlog at HMRC and we don’t want people to be caught up in potential chaos and bureaucratic delays when filing their return, which would probably lead to needless late penalties.”
If a taxpayer has a reasonable excuse for filing their return late, such as being seriously ill or the online portal crashing, they can appeal against the penalty. If the appeal is successful, the fine can be cancelled. However, accountants have advised taxpayers to submit on time even if they have a reasonable excuse for filing late to avoid being caught up in a potentially lengthy appeal.
Zena Hanks of Saffery Champness, an accountancy firm, said: “The appeals process is no quick-fix solution and the procedure can embroil the taxpayer for years, with an uncertain outcome hanging over their head.
“It can cause taxpayers considerable stress, stretching over months or even years, only for them to be found to have a perfectly legitimate reason for filing late. Appealing against a penalty may feel to some taxpayers more like a testt test of endurance or a war of attrition than thhan an empathetic system of redress.” redress.””
There is a £100 fine for late filing filinng and an additional £10 daily penalty penaltty if you have still not filed after three ee months, up to a maximum fine of £900.
After six months HMRC will fine ne you an additional £300 or 5pc of the tax you owe, whichever is larger.
If you have made an error on your our return, you can resubmit it before e the next filing deadline 12 months later er and inform HMRC of the change. However, you may still be penalised sed if you are found to have been careless ess or deliberately submitted incorrect information. There is no fine to pay if you can prove you were not careless.
But you could face fines of up to 30pc of the tax you owe if you were careless, between 20pc and 70pc if you deliberately underestimated your tax bill and between 30pc and 100pc if you submitted false information and tried to hide it.
More than 11 million tax returns are due to HMRC by Jan 31, but many have yet to be completed. People who need to submit a self-assessment form include self- employed sole traders, high earners on salaries of £100,000 or more, landlords, investors and people who earn income from abroad.
More than 700,000 returns were submitted on the deadline day last year. The year before, 749,500 people left it to the last minute.
This year about a million taxpayers are expected to file their annual tax returns in the final 72 hours before the deadline on the last day of January.
An HMRC spokesman said the tax authority had robust processes in place and added that its customs systems and self-assessment systems wereere were separate.separate separate.
A million of us will miss next week’s tax return deadline, but penalties can be reversed, finds Harry Brennan