Once again, January 31st has come and gone. This has always been a stressful time for accountants and their clients, but even more so this year. Previously, no late filing penalty would be charged if there was no tax due. However, this year was different! One major difference this year has been that anyone who fails to send in their tax return on time will be penalised even if there is no tax loss.
Or so we all thought! However, it looks like someone has had second thoughts on this, but decided not to tell anyone until after the deadline had passed. If you have received a tax return and failed to send it back by the due date, and if you feel that you should not have received it, then you can telephone the tax office and if they agree then they will cancel both the tax return and the penalty.
This is not the same as the normal appeal procedure which requires that you have a “reasonable excuse” for not returning it on time. A reasonable excuse under the normal appeal procedures would include serious illness or death of the taxpayer or a close family member, unexpected postal delays, or a delay on the part of the tax office to provide required authorisation codes, etc. It would not include the individual considering that a tax return is not required in their particular circumstances.
It is not that we feel that state pensioners whose only other income is all taxed at source, or people receiving no income other than non-taxable state benefits, should be penalised for not sending in an on-line tax return. It is that the old rules would have worked to preclude them from paying a penalty in any event.
It is, instead, that people should know where they stand and what their obligations are. The current position suggests that the regulation changes were not thought through before they were enacted. It was obvious to anyone closely involved in the system that these relative draconian penalties would affect a considerable number of taxpayers, currently estimated at about 900,000, and that many of these will be similar cases to those given above. However, if these people can now avoid the penalties by simply telephoning the tax office then this begs two questions:
1. Should not those people in similar circumstances who have incurred professional fees in submitting their returns on time now be recompensed, and
2. What effect will this have on the number of late returns in future years if people think that this will be repeated.
Would it not have been better to have legislated for these circumstances arising by allowing this process during the tax year, rather than introducing it as a knee-jerk reaction once the deadline has passed?
WatkinsonBlack are pleased to advise on these and other matters. They have considerable experience in these and other matters, including providing a very cost-effective payroll bureau service. If you want to arrange a no-obligation initial meeting on any taxation or accounting matter then please contact us. Please note that these ideas are intended to inform rather than advise and you should always obtain professional advice before taking any action.