I'm getting daily penalties from HMRC... help!
I've been warning people for months and months and months, but unfortunately some people have fallen into the daily penalty regime from HMRC. I'm going to outline how it works but the bottom line is: GONE are the days, where if you did not have a tax liability your penalties would be reduced to nil.......!
> If HMRC issue you a tax return to complete, then you have a legal obligation to file it on time.
> For the online 2011/12 tax return (due with HMRC by 31 January 2013), you will have received £100 penalty as at 1 February 2013 for late submission.
> Any appeal that you would like to take up with HMRC will not be looked at until you file the outstanding tax return(s).
> HMRC have the power to issue 100% tax geared penalty for any returns that are not filed by the due date (for some people this can cost an incredible amount of money).
> From 1 May 2013, HMRC attach "daily penalties" of £10 for a further 90 days or until the tax return has been sent in.
> HMRC can also fine you a further (the higher of): £300 or 5% of your tax bill, if still not received after those 90 days mentioned above
IF YOU ARE LATE, PLEASE DO NOT SEND IN A PAPER TAX RETURN. THE DEADLINE FOR SUBMISSION IS 31 OCTOBER (NOT 31 JANUARY) AND THEREFORE BRINGS ALL THE DATES FORWARD IN RESPECT OF FILING THE TAX RETURN/ PENALTIES THAT ARE CHARGEABLE.
HMRC will not accept the fact that you 'weren't self employed during that year' as a reasonable excuse. If you have not previously advised them (though a tax return) that you do not require a tax return in the future (by completing the relevant numbered boxes within the return - a note in the extra information box does not count), then they shouldn't issue one.
If you do not submit your tax return until 31 January (even with the relevant boxes completely correctly) HMRC will still issue a tax return for the following year. HMRC ear mark the tax returns (for the following year) by 28 February, so any information submitted by January, WILL now get picked up in time! From 6 April 2014, HMRC will have shuffled through all the returns to find the correct ones to issue, this was not the case in previous tax years.
HMRC will however, admit that you told them on the tax return and therefore you can stand your ground and get them to capture the tax return at nil for that year.
I know someone who was successful and had his penalties reduced to nil. For years and years (approx. 5) he had not been self employed and kept telling HMRC (self assessment department) over the telephone - of which HMRC had noted the telephone calls on their system, each time year though, they continued to incorrectly issue tax returns for completion and submission! As this runs off a computer, it does not pick up telephone call notes! So HMRC finally decided during 2009/10 to capture the returns as 'nil' returns. Unfortunately the computer system STILL sent him another notice to file for 2012 and HMRC therefore FINALLY accepted responsibility as they had already captured nil returns previously and they had not received a new notification that he was to be self employed again (ie: needing a tax return!).
You may be thinking - "ah yes I could do that!" Unless you have the telephone notes on HMRC's history to advise of all these complaints and also the fact that HMRC had captured nil returns already and had no new notification forms to say that he was self employed - I can't see how you'd get any luck.
Each case is specific in the information needed to deal with the tax payer. Every case is different and not one person in the tax system is exactly the same;
Information on the tax return for the last year / the date it was submitted / The deadline for amending tax returns / History on file with HMRC / Information during the current year
I am VERY intrigued to find out about other accountant's experiences with appeals against these penalties... please comment below!