30 June 2017
Once upon a time when tax inspectors wore bowler hats, and before filing by internet was invented, we used to take huge bags of tax returns to local tax offices on the filing deadline of 31 January.
This year, we have been told by HMRC that due to errors in their own computers, which they do not intend fixing, there are a number of circumstances in which internet filing of 2016/17 tax returns will be impossible – they will need paper copies delivered by post instead. Some of the permutations of different types and levels of income cases which will need to be filed in paper are relatively common, so there is a very real possibility that a lot of returns will be affected.
In itself, apart from being a backward step and not very encouraging at a time when HMRC are determined to ‘Make Tax Digital’, it’s not the end of the world. HMRC have said that where paper returns are sent in ‘late’ after 31 October because of this, they will accept appeals against the automatic £100 late filing penalty. The implication is that paper returns which reach HMRC after 31 January 2018 will be charged a penalty, regardless of the reason.
The problem is that a lot of taxpayers usually deal with their tax returns within a few weeks of the normal deadline of 31 January in the knowledge that for many years, tax returns can be sent, approved and filed with HMRC electronically – frequently within a matter of minutes till the deadline.
We therefore face the prospect this year of practical difficulties in having to send paper tax returns close to the filing deadline to clients by old fashioned post for them to sign, mail back to us and then post them to HMRC, each step adding days to the process. HMRC no longer have local offices to which returns can be delivered by hand, and this will be even more challenging for clients overseas.
We will not know whether a particular return is excluded until it is completed. The only safe course of action is to aim to have 2017 tax returns completed before 31 October or, failing that, to allow extra time in case the return needs to be filed in paper by 31 January.
For further information, see our press release on the matter: HMRC refusing to fix website errors that will hit taxpayers with automatic fines.
If you have any questions regarding this blog, or any other tax-related issue, please contact me or your usual UHY adviser.
