Publications featured in include: This is Money
Following HMRC’s refusal to stop chasing taxpayers caught by the controversial ‘loan charge’ during the Coronavirus lockdown, the tax authority should do more to reassure taxpayers that it will not penalise them if they are unable to respond.
The All Party Parliamentary Loan Charge Group wrote to HMRC on 2 April asking it to temporarily stop sending letters to taxpayers demanding a response within 30 days during the Coronavirus lockdown. On 7 April, HMRC wrote back saying it was unable to stop pursuing them due to statutory time limits on collecting tax.
HMRC can be flexible over 30-day deadlines and should make this clear to worried taxpayers. HMRC recently announced that it will not be undertaking any debt collection during the Coronavirus lockdown, showing that the organisation is prepared to be fair to taxpayers during a time of national emergency.
John Sheehan, tax partner at our Letchworth office, says: “By taking a hard line on these time limits, HMRC risks adding unnecessary stress in what is already a very trying time for everyone. It should make clear that nobody will be penalised for missing a 30-day deadline because they couldn’t respond to a letter.
While we understand that HMRC is bound by statutory 30-day time limits in order to collect tax, in practice we know HMRC has more flexibility than it’s letting on.
It’s vital that HMRC makes taxpayers aware that it will be understanding of taxpayers who are late in responding. It can be flexible in exceptional circumstances and the Coronavirus lockdown is nothing if not exceptional. That’s proven by HMRC already suspending debt collection.
Many of these loan charge letters will have been sent to business addresses that have been closed for at least two weeks and will remain closed for an indefinite period. Those taxpayers will be unaware they have even received a letter and will no doubt miss the deadline before they find out.”
