QUESTION: I failed to submit my tax return by January 31 as I was ill in hospital and have received a penalty notice of £100 from HMRC for failure to submit my tax return. I have only recently returned to better health and I am concerned about missing the filing deadline. What can I do?
ANSWER: The deadline for filing 2014/15 self-assessment tax returns was October 31 for paper returns and January 31 for returns filed online. If you’ve been asked to complete a tax return for 2014/15 and haven’t filed it yet, you should have been issued with an automatic, initial penalty of £100. After a three-month delay, the penalties really start to spiral.
There is a danger that people wrongly think that the automatic £100 penalty for those who missed the deadline by a day or two has been scrapped because the government was consulting on possible reforms to the penalty system. It is important to note that there could be extenuating circumstances where someone may be able to avoid a penalty by claiming a ‘reasonable excuse’ for filing their tax return late. These could include flooding or severe weather problems, but also life events such as serious illness or bereavement, and other causes beyond the taxpayer’s control.
In order to get your tax affairs in order, you need to either:
:: Ask HMRC to withdraw the tax return if you think it’s not required. If HMRC agrees, you no longer have to file a return and any penalties issued for missing the deadline should be cancelled. Make sure you make a note of who you spoke to and when, and what the outcome is expected to be - when will you have a decision from them for example? HMRC are unlikely to withdraw a return if you have been self-employed at any time during the tax year – even if it was only for a very short time. You usually have only two years from the end of the tax year for which the return is due, in which to ask for a return to be withdrawn; or
:: File your tax return as quickly as possible, as penalties escalate the longer the delay. It also makes sense to file your return online as the deadline for filing online was more recent.
It is important that, even if a reasonable excuse is established, the taxpayer files without unreasonable delay once the excuse has ceased. For example, when you recover from the illness that prevented you from filing your return on time in the first place, you must then file as soon as reasonably practicable. In all cases full details must be sent to HMRC and it may be that a combination of reasons, rather than a single reason, together may constitute a reasonable excuse.
If you’ve filed your 2014/15 tax return after January 31 then you can, unfortunately, expect to receive a late filing penalty. If you have a good reason for the delay in filing your return, you may appeal against the penalty.
HMRC provides a list of common examples of reasonable excuses on their website such as:
• Your partner or another close relative died shortly before the tax return or payment deadline;
• You had an unexpected stay in hospital that prevented you from dealing with your tax affairs;
• You had a serious or life-threatening illness;
• Your computer or software failed just before or while you were preparing your online return;
• Service issues with HM Revenue and Customs (HMRC) online services;
• A fire, flood or theft prevented you from completing your tax return;
• Postal delays that you couldn’t have predicted.
Last year HMRC announced that it would be fairer on those with genuine excuses because they’re focusing on larger, deliberate tax evaders rather than ordinary people. This remains the case, but the excuse must be genuine and evidence may need to be presented. This year, HMRC said they will also be accepting reasonable excuses up front before the deadline to avoid penalties after the deadline.
The following aren’t usually accepted as a reasonable excuse:
• You relied on someone else to send your return and they didn’t;
• Your cheque bounced or payment failed because you didn’t have enough money;
• You found the HMRC online system too difficult to use;
• You didn’t get a reminder from HMRC.
:: Malachy McLernon (m.mclernon@pkffpm.com) is a director of PKF-FPM (www.pkffpm.com). The advice in this column is specific to the facts surrounding the question posed. Neither The Irish News nor the contributors accept any liability for any direct or indirect loss arising from any reliance placed on replies
