Brexit pressure sees HMRC delay Self-Assessment penalty notices

George Hay Chartered Accountants

Self-Assessment tax returns for 2017/18 should have been filed by midnight on 31 January 2019 and whilst the vast majority of taxpayers filed their returns on time, 731,186 missed the deadline.

Those who failed to file on time will now also have to wait longer to receive penalty notifications from HM Revenue & Customs (HMRC).

Owing to Brexit-related pressures, HMRC is to delay issuing notification of penalties 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.

The notifications of £100 penalties are usually sent out in February but may be sent as late as the end of April this year. HMRC has said that if the withdrawal agreement is confirmed sooner, the notices will be sent out sooner.

It has also said that individuals who filed late will still be charged the penalty, despite the notice being delivered later. It will continue to issue daily penalties to those who have still not filed three months after the deadline, in appropriate cases, at the normal time.

The Association of Taxation Technicians (ATT) has expressed concerns that taxpayers may be unable to avoid the prospect of £10 daily penalties, if notices do not arrive until late April or even May, in some cases.

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.”

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 is charged; and after 12 months, another 5% or £300, again whichever is the greater of the two.

Anyone who has yet to file their 2017/18 tax return, should do so as a matter of urgency.

Whilst the £100 fixed penalty will be unavoidable, in the absence of a reasonable excuse, ensuring the return is filed no later than the 30 April will mean taxpayers avoid the additional daily penalties of £10 per day.

At present, it is not clear whether HMRC will offer any leniency to taxpayers on account of the late notifications.

If you know you missed the 31 January deadline and you’re concerned about accruing unnecessary penalties, we would urge you to seek professional advice at the earliest opportunity.

Entrust us with your annual tax return and you can rest assured that we will take care of your tax affairs efficiently, accurately and compliantly. We can assist you with fulfilling your self-assessment obligations; saving you time, money, helping you to grow your business and eliminating anxieties in the process.

If you’d like to discuss your circumstances in more detail with one of our specialist tax advisers, contact us at one of our three offices in Biggleswade, Huntingdon or Letchworth, today.