HMRC Fines Low Earners Who Owe No Tax!

 

This thread shows that HMRC is fining people on low incomes (who owe no tax) for not submitting a tax return.

Our new report: 40% of all HMRC late filing penalties charged to people who don't earn enough to pay tax.

420,000 penalties charged to people on low incomes over the last four years. Article here: https://t.co/khNZVStrCO

Thread follows

— Dan Neidle (@DanNeidle) June 26, 2023

The UK tax system is supposed to be progressive, meaning that those who earn more pay more tax. But a new report has revealed that 40% of all HMRC late filing penalties are charged to people who don't earn enough to pay tax.

This is a scandal. It means that people who are already struggling to make ends meet are being punished for not filing a tax return, even though they owe no extra tax.

There are a number of reasons why people might not be able to file their tax returns on time. They might be working multiple jobs, caring for a family, or simply struggling to keep track of their finances. Whatever the reason, it's clear that these people are not trying to evade tax.

But HMRC doesn't seem to care. They're happy to slap these people with hefty fines, even though they know that the fines will only make their financial situation worse.

This is not just unfair, it's also counterproductive. Charging people who don't earn enough to pay tax with late filing penalties is only going to drive them further into poverty.

It's time for HMRC to change their ways. They need to stop targeting the poor and focus on those who are actually trying to evade tax.

In the meantime, if you're one of the many people who have been hit with a late filing penalty, don't give up. You may be able to appeal the penalty if you can show that you had a reasonable excuse for not filing your return on time.

The tax system should be there to help people, not punish them.

These people are already struggling to make ends meet, and now they're being punished for not being able to file their tax returns on time. It's a disgrace.

I urge everyone to contact their MP and demand that they take action to stop this injustice. Go back to how the law was before 2011, when late filing penalties would be cancelled if, once a tax return was filed, there was no tax to pay.

 
Tax does have to be taxing.

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HMRC To Accept Bulk Appeals for Late Tax Returns Due To COVID

 

Tax agents and accountants will be able to send bulk appeals against late filing penalties for tax returns filed after 28 February due to COVID-19, HM Revenue and Customs (HMRC) has confirmed.

HMRC has previously announced that late filing penalty notices won’t be issued to anyone who was unable to file their 2020/21 Self Assessment tax return by 31 January, provided it was completed by the end of February.

The department recognises the pressure faced this year means that some individuals, businesses and their agents have experienced difficulties in meeting their filing obligations. As a result, COVID-19 may be accepted as a reasonable excuse for any appeals made against a late filing penalty for Self Assessment customers.

Agents representing individuals and businesses who have not been able to file by 28 February due to COVID-19 will be able to complete a bulk appeals form. The process will be available for appeals made against 2020/21 late filing penalties for Self Assessment customers, between 9 March and 6 May.

Agents can use the bulk appeals process, which will be available on GOV.UK, to record details of their clients’ appeals. Once completed, the form should be posted to the following address: Bulk Agent Appeals, HM Revenue and Customs, BX9 1ZH.

In order for the bulk appeals to be processed correctly, agents are required to do the following:

• each bulk appeals form can only be used for a maximum of 25 clients. Further forms can be submitted for additional clients
• bulk appeals forms must be sent to HMRC using the above address and if multiple forms are completed, these should be sent in separate envelopes
• all fields on the form should be completed for each client – without this, HMRC will not process the appeal for that client
• this form must only be used where the tax return was not filed by 28 February 2022 due to COVID-19. If the penalty is subject to appeal on other grounds, please use existing channels
• Find out more about Self Assessment

Individual appeals can still be completed via GOV.UK or by post – the postal route is for bulk appeals only. Appeals on behalf of one client should be filed using the SA370 or filed online. Appeals for a High Net Worth Unit case should be submitted via GOV.UK and should not be included on the bulk appeals form.

This service is only for a COVID-19 related reasonable excuse. HMRC reserves the right to carry out random checks to ensure the validity of the data or to seek further clarification as to the exact nature of the COVID-19 related reasonable excuse.

The bulk appeals facility is not available for 2020/21 Self Assessment late payment penalties, nor any other penalties.

Tax does have to be taxing.

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Death Is a Reasonable Excuse For Late Filing

 

Stokes vs Revenue and Customs

 

"HMRC’s decision was, in my view, flawed, because it did not take into account a relevant fact, being that the appellants’ tax agent was not paying attention to his clients’ affairs between April 2019 and the time the tax returns were filed, due to his father’s illness and death. This means that the Tribunal can reduce the penalties if it thinks it right because of special circumstances."

Tax does have to be taxing.

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Possible Way To Avoid £100 Late Filing Fine?

You can write that if people miss the deadline then they can claim that they were still unsure about the impact of the LC announcements and whether the LC applies to them. They submitted after learning that it does not. HMRC have said that they will apply no penalty or interest.

— HMRC Victim #STOPtheLoanCharge #SaveLives! #IR35 (@HMRCVictim) January 29, 2020

I have no idea if this excuse, if you do file late, will work.

It would save time, and stress if you file before the deadline!

Tax does have to be taxing.


HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

HMRC Issues Late Filing Penalty Two Weeks Early

HMRC has been accused of "gross incompetence" having incorrectly fined a Norfolk business for late tax returns - despite the deadline being in a fortnight.

Eastern Daily Press reports that Debit and Credit Accountancy, a family run business based in Wroxham, spotted the taxman's blunder when a client was slapped with the £100 fine.

Following a complaint, HMRC has revoked the fine.

Tax does have to be taxing.


HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Online Filing Deadline Reminder

As we approach the 31 January online filing deadline for self assessment tax, I am sure I don't need to remind loyal readers that if you miss the deadline by even one day you will be liable for an automatic £100 fine.

I am sure I don't need to remind you of this!

However, consider yourselves reminded!

Tax does have to be taxing.

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Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

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However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

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HMRC Indulges In a Spot of Penalty Farming

Oh dear, it seems that HMRC is to delay sending out late filing penalty notices to taxpayers who failed to file their self-assessment tax return by 31 January, until April 2019.

Now at first glance that may seem to be a "nice" gesture, whereby no penalties etc will be levied until April.

Sadly, this being HMRC, nothing is ever as simple  or as "nice" as that.

AccountingWeb notes that around 700,000 taxpayers failed to meet the 31 January 2019 deadline for filing their 2017/18 tax return, so they are due to receive an automatic £100 late filing penalty. The letters informing taxpayers that this penalty has been charged are normally issued in February, but this year HMRC will not start the process of issuing those penalties until April 2019.

The £100 penalty will still be due, but the taxpayer won’t know that they have been charged.

HMRC says the latest date that late filing penalties for 2017/18 tax returns will be issued is 30 April.

Given that a letter from HMRC can take over a week to arrive, taxpayers may not realise that their tax return hasn’t been recorded as received by HMRC until well into May. Many taxpayers will also be away on holiday in late April due to the Easter bank holidays.

Here's the "fun" bit, If a SA tax return is over three months late, ie not logged as received by HMRC by 1 May, daily £10 penalties are charged for every additional day the return is late, until the return is six months late. Then another automatic late filing penalty is issued, at the rate of £300 or 5% of the outstanding tax, whichever is the greater sum.

Aha!

Therefore by delaying notification of the penalty, HMRC is stacking the cards in its favour for raising extra fines at the rate of £10 per day. That, by the way, is known as:

"Penalty Farming".

 

HMRC claim that the delay in issuing penalty notices is due to lack of adequate resources within the department. A decision has been taken to free up call centre staff to deal with calls relating to the UK leaving the EU.

HMRC said:

“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.

The vast majority will be aware they missed the January 31 filing date, as we do remind regularly with nudge messages before the deadline.”

As Rebecca Cave, in her article, notes HMRC has known about the Brexit date of 29 March 2019 for almost two years, but it has failed to plan to have adequate resources available to deal with an expected surge in enquires from taxpayers. However, taxpayers are penalised if they fail to meet the tax return filing deadline.   

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance



HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Interest For Late Payment Rises To 3.25%

Following the increase in the Bank of England base rate to 0.75% from 2 August 2018, HMRC has announced an increase in the rates of interest on late paid tax. 

The rates of interest for late payment will increase from 3.00% to 3.25% from 21 August 2018.


The exception is quarterly instalment payments of corporation tax, for which the rate rises from 1.50% to 1.75% from 13 August 2018.

Repayment interest remains unchanged at 0.5%.


Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance



HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

HMRC's Overzealous Late Filing Penalties

HMRC is being accused by tax professionals of being overzealous in its desire to fine people first, and ask questions later wrt late tax returns.

HMRC published figures, following a freedom of information request from Clifford Chance, that show it cancelled 270,000 late filing penalties in 2016 and 400,000 and 610,000 penalties in 2014 and 2015, respectively (more than a third of the total number of fines issued in both years).

HMRC said that most of these penalties were cancelled after taxpayers provided a “reasonable excuse” for submitting their tax returns late, such as the death of a close relative shortly before the filing deadline, or an unexpected stay in hospital.

The FT quotes HMRC:

“We don’t want penalties, we just want tax returns.

Taxpayers with a reasonable excuse for filing late or who have been taken out of [the self-assessment system] do not have to pay penalties. Taxpayers who file on time are not issued with penalties.” 

Dan Neidle, a partner at Clifford Chance who submitted the FOI, said he filed a self-assessment tax return on time at the end of December last year.

At the end of January 2018, he received a penalty of £100 from HMRC because his tax return “was not sent in on time”. Mr Neidle appealed the penalty, which was overturned by HMRC at the end of last month.

HMRC said in its letter accepting his appeal that the lawyer should “make sure that you send in your tax returns and pay the tax you owe on time in the future”.

 “If you do this, we won’t charge any penalties.” 

Cheeky bastards!

Mr Neidle said:

“The sheer number of penalties HMRC is issuing, presumably on an entirely automated basis, is sobering. The large number subsequently cancelled, and the harsh comments HMRC has received from the judiciary on a number of recent appeals, suggests something is going wrong. 

The question is how many people are ending up paying penalties that were unlawfully issued.” 

Mitch Young, co-founder of Fusion Consulting, which specialises in tax and IT advice, said a number of his clients had also received late penalty notices “incorrectly, even when they have submitted their self-assessment tax returns well before the deadline”.

The mistake was made either because of a system error with HMRC, or because the tax authority had issued duplicate unique tax reference numbers.

HMRC says it does not keep a record of why penalties are cancelled. In 2017, it stopped recording how many late return penalties were cancelled “due to costs and a lack [of] a business need”, it said in its response to the FOI request.

Mr Neidle questioned this decision, saying:

“If HMRC doesn’t track the number of penalties wrongly issued, how can they learn from their mistakes?”

I can answer that, HMRC has no interest in learning from its "mistakes"!

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance



HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"