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HMRC penalty ‘amnesty’

Readers may have read recently of HMRC’s change in practice on penalties for late filing of personal tax returns.

What’s it all about? The law provides for an automatic penalty of £100 if a personal tax return is even a day late (and more than that 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. 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 return has been filed.

Is this an amnesty? No. You will still need 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.

If HMRC say they aren’t checking, what’s to stop me selecting a “reasonable excuse” at random and putting it on the appeal form? That would be dishonest and illegal: we do not recommend it.

I’ve already paid a penalty for late filing. Can I get it back? Sorry: No.

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 said nothing about how they will approach late appeals.

What’s the point of having a penalty regime if you don’t enforce it? You’d have to ask HMRC that.

David Whiscombe

Consultant

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