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Taxpayers who receive penalties after the 31 January self-assessment tax deadline are being urged to appeal if they believe the fines were wrongly imposed, as HMRC cancelled over 60% of late payment penalties last year*, our research shows.
Data provided by HMRC shows that of the £275m in penalties imposed by HMRC for late payment of self-assessment tax last year, £167m was later completely cancelled. This highlights the importance of taxpayers ensuring that HMRC’s reason for the penalty is correct and appealing against it if necessary.
For the upcoming 31 January deadline, HMRC has confirmed that personal or business ‘pandemic-related’ disruption may be a reasonable excuse for late filing of tax returns. HMRC’s more understanding approach towards late filing suggests this may also be the case with the late payment of tax.
However, taxpayers should not rely solely on HMRC being more cooperative as a result of the pandemic. Where possible, they are encouraged to pay their tax bill if they can afford to, or at least negotiate payments with HMRC.
Some taxpayers will be facing a much larger tax bill than usual, as many are likely to have deferred their 31 July 2020 tax payment last year. This ‘double bill’ is now due to be paid by the 31 January deadline.
Graham Boar, tax partner in our Letchworth office says: “It’s extremely important that taxpayers appeal any penalties they do not agree with. HMRC certainly gets it wrong at times and will correct its mistakes when presented with the evidence.
Ultimately, taxpayers will be responsible for spotting any mistakes straight away, as once HMRC receives a payment, in their eyes the case is closed and won’t be looked at again.”
Taxpayers can set up an online payment plan for tax bills up to £30,000 to spread repayments over a 12-month period. Since October 2020, £69.1m in overdue tax has been rescheduled by nearly 25,000 taxpayers** via these ‘self-serve’ Time to Pay arrangements.
Graham Boar says: “Individuals who fear they will be unable to afford their upcoming tax bill need to act now and begin negotiating with HMRC. They should be able to stagger their payments through a Time to Pay arrangement but that’s down to the taxpayer to arrange.”
