Tax penalties delayed due to Brexit

Tax penalties delayed due to Brexit

HM Revenue & Customs (HMRC) has announced that it is delaying the issuance of penalty notices for individuals who didn’t file their self-assessment in time due to Brexit constraints.

Each February the taxman issues £100 penalty notices for individuals in self-assessment who have not filed their online return by 31 January.

In an agent’s update published last week (February 22), the taxman said this created considerable demand on its call centres and back offices, as customers contacted HMRC to consider their options.

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Since the taxman is expecting an increased demand for these service as the UK leaves the EU, it has decided to delay the issue of these notices to ensure it can provide the best service to its customers.

Individuals who filed late will still be charged the penalty; but the notice will be delivered later than normal, HMRC stated.

"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," it added.

But the Association of Taxation Technicians expressed concern this decision might leave taxpayers facing significant extra penalties, as the delay could give them a "misplaced confidence".

ATT stated the £100 penalty notice acted as an important prompt to taxpayers that their return was outstanding, as well as reminding them that they risked incurring an additional penalty of £10 per day if the return is still outstanding after three months from the January due date.

The professional body is concerned that if the penalty notices are not received until late April or into May, the £10 daily penalties will be unavoidable.

The taxman stated it would issue daily penalties to individuals who have still not filed three months after the deadline, in appropriate cases, at the normal time.

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."