Brexit may increase tax penalties

It has been announced by HMRC that penalty notices for taxpayers who failed to meet the 31st January tax return deadline will not be posted until April. HMRC have blamed this delay on Brexit! What else? These penalty notices are usually issued in February, which tends to act as a reminder to defaulters to get their tax return sent in before the beginning of May, which is the next deadline after which further penalties apply.

As I mentioned in a recent article around 700,000 people missed the 31st January deadline and are due to receive an automatic £100 penalty unless they have a credible reasonable excuse. HMRC have indicated that some of these penalty notices may be issued as late as 30th April and given how slow mail can be from HMRC it may be several days later that the penalty notice drops on the doormat.

When the penalty notice does finally arrive this is likely to come as an unpleasant surprise to some who may not realise that they have been charged. Sometimes there can be problems with the electronic filing of tax returns or people through an oversight simply do not realise they needed to file a return. Of course many will be well aware that they have missed the deadline but may mistakenly believe that they have avoided the penalty until the notice arrives in April. Worse still if the tax return has not been filed by 1st May, daily £10 penalties are charged for each additional day that the return is late up to a maximum of 90 days. At that point a further automatic late filing penalty applies of the greater of £300 or 5% of the tax outstanding.

This is a disappointing announcement from HMRC. If someone has accidentally missed the deadline and only becomes aware of this in April that leaves little time to correct matters before the penalties start getting expensive. HMRC say the delay is due to a lack of resources and a decision to free up HMRC staff for Brexit related work. It sounds more like poor planning and the result will be that more taxpayers are penalised for missing the tax return filing deadlines.

The message is if you missed the 31st January deadline the £100 penalty notice is coming but don’t delay completing your tax return any longer or you run the risk of even greater penalties.

If you’d like more information about our tax planning services, call Graham on 07793 621979 or email at graham.arnott@armstrongwatson.co.uk

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