The Association of Taxation Technicians (ATT) is concerned that a decision by HMRC to delay issuing penalty notices for late filing of tax returns means that taxpayers will be left unaware that they may become liable to significant extra penalties.
Each February, HMRC issues £100 penalty notices following the 31 January self-assessment deadline. However, Brexit-related pressures on HMRC resources mean that the issue of those notices will be delayed this year – possibly until near the end of April 20191.
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 date2.
ATT is concerned that if the penalty notices are not received until late April or into May, the £10 daily penalties will be unavoidable.
HMRC has said that daily penalties will be issued “in appropriate cases” but ATT is calling for clarity on 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.
“Anyone who has yet to file their 2017-18 tax return should do so as a matter of urgency. They won’t be able to avoid the £100 penalty unless they have a reasonable excuse but getting the return filed online no later than 30 April will mean that they will avoid the additional £10 per day.”
Notes for editors
- HMRC’s announcement is included in issue 70 of HMRC’s Agent Update which was published on 22 February. It reads:
“Issuing Self Assessment penalty notices - timings for this year
As part of EU Exit contingency planning, we have decided to make a change to the timings for sending notification of Self Assessment penalties. £100 penalty notices are normally issued in February for individuals in Self Assessment who have not filed their online return on time (by 31 January). 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.
Individuals who filed late will still be charged the penalty; but the notice will be delivered later than normal. We 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.”
- The £10 per day penalties continue until the return is filed (with a maximum of 90 days) after which a fixed penalty of £300 is also incurred.