Self-assessment tax returns: take action to avoid late filing penalties

In light of the global pandemic, HMRC confirmed that Self Assessment taxpayers had more time to pay their tax bills or set up payment plans as coronavirus continued to impact the economy. So long as affected taxpayers took action, they would not face the standard 5% late payment penalty charge so long as arrangements were in place by 1 April 2021. Concurrently further late payments are charged at 6 months being August 2021 and 12 months being February 2022 on tax outstanding where a payment plan has not be put in place.

Our London Tax Solicitors and Barristers have vast experience of tax laws and first hand commercial, litigation and advocacy experience. We have a proven track record of successfully contesting disputed tax assessments and penalties with HMRC. The tax authorities have lost many cases that are appealed through negotiation, internal review or through the Tax Tribunal.

Late filing penalties waived for Self Assessment tax returns

Ordinarily, late filing penalties are applied to all returns filed after the 31 January 2021 deadline. Those penalties can be appealed if the taxpayer has a reasonable excuse for filing late. However, this year HMRC is not issuing late filing penalties for a month to help taxpayers and agents who are unable to meet the deadline. Late filing penalties will not be issued for online tax returns received by 28 February 2021.

HMRC’s chief executive Jim Harra states:

We recognise the immense pressure that many people are facing in these unprecedented times and it has become increasingly clear that some people will not be able to file their return by 31 January. Not charging late filing penalties for late online tax returns submitted in February will give them the breathing space they need to complete and file their returns, without worrying about receiving a penalty. We can reasonably assume most of these people will have a valid reason for filing late, caused by the pandemic.

HMRC’s Chief Executive, Jim Harra

What are the penalties for late filing of tax returns?

Penalties for late filing of returns and paperwork or late payment can be applied to any of these types of taxes:

• Self Assessment Tax Return deadlines and penalties;
• PAYE/National Insurance payments and deadlines;
• PAYE late payment penalties;
• Missed VAT deadlines- penalties and surcharges;
• Late returns and late return penalties under CIS; and
• Corporation Tax penalties.

Can I appeal a HMRC late filing penalty?

If a taxpayer disagrees with HMRC, the taxpayer has the following options:

Stage 1: Request a HMRC review: A taxpayer can appeal in writing within 30 days of HMRC’s notice of their decision. HMRC can offer an internal review of the disputed decision (or the taxpayer can request this procedure at any time). The review is an entirely internal procedure completed not by the original HMRC decision maker but by a different HMRC officer.

Stage 2: Appeal to the Tax Tribunal: A taxpayer can appeal to the First Tier Tax Tribunal if the taxpayer cannot agree their position following the review. The independent tribunal will make a determination on the case. A further appeal is permitted if a taxpayer does not agree with the decision. There are strict time limits for appealing to the Tax Tribunal and you should seek legal advice as soon as possible.

What is a reasonable excuse?

Schedule 55 provides that penalties do not arise where the taxpayer is able to show that they had a reasonable excuse for failing to comply with a tax requirement such as:

• Late filing of returns
• Failing to make a payment on time
• Failing to file online
• Failing to notify chargeability

Reasonable excuse is expressly stated to exclude where the taxpayer relied on a third party to do anything i.e. third party defence therefore reliance on an accountant or tax adviser is unlikely to be a ground of defence.

How do I appeal a First Tier Tax Tribunal decision?

Any appeals against HMRC’s decisions must first be made to the First Tier Tax Tribunal. Upon receipt of the outcome, if you do not agree with the decision of the First Tier Tax Tribunal, you can appeal to the Upper Tier Tax Tribunal however you must obtain permission from the First Tier Tax Tribunal. If you do not receive permission, you will need to request permission from the Upper Tier Tax Tribunal.

There are strict time limits for submitting an appeal, usually 56 days from the date of the Tribunal decision. If you do not have permission, then you must seek permission within 30 days of the refusal letter.

Has my accountant failed to file my tax return in time?

Whilst there may not be a third party defence in an appeal against a tax assessment or penalty, if your tax agent, accountant or tax adviser has failed to carry out your instructions i.e. file a tax return, prepared incorrect calculations, you may have a valid complaint or potential negligence claim against the individual or company.

Our professional negligence claim team can assist and advise you on the suitable course of action.

Expert London HMRC Late Penalty Disputes Lawyers

If you need HMRC Penalty Dispute advice, we are available to aid you at every stage of the HMRC investigate process. Members of our legal team have first-hand experience and knowledge of the internal workings of HMRC. We can provide you with the very best representation in negotiations with HMRC and defending all forms of HMRC fraud, tax inquiry, tax fraud investigation, criminal tax evasion and HMRC enquiries and investigations. Our team specialises in successfully challenging HMRC decisions and will assist you in every aspect of the investigation.