The confusing state of self-assessment fines
It's not long at all since HMRC last overhauled the system of fines and penalties for those who miss the deadline for submitting their self-assessment tax returns. Already, however, the system seems to have descended into confusion with some experts calling for an overhaul.
Letting late submitters off
Recently it was reported that a leaked internal communication from HMRC encouraged staff to let off those who provided a “reasonable excuse” for submitting their tax return late – as long as they had since caught up. Previously, a reasonable excuse would only have been accepted, but only after a lengthy investigation.
However, with the vast majority of appeals ultimately being accepted, HMRC apparently decided to accept such excuses without investigation if the tax had since been paid in order to conserve resources for other purposes such as cracking down on corporate tax evasion.
The revelation that HMRC were taking a more lenient approach to those who have an excuse for late submission of their self-assessment tax return (http://accountantsleicester.net/services/self-assessment-tax-returns/) was welcomed by taxpayers, but it also attracted its fair share of critics. HMRC has published a list of acceptable excuses on its website. With no investigation into the claim, some have criticised the move for reducing the consequences of late submission to picking an excuse off the list in order to bypass the fine.
Fair and fit for purpose
There have also been criticisms levelled at what this situation says about the fairness and appropriateness of the penalty system and of HMRC as a whole in its current form. While HMRC’s crackdown on major tax avoidance is widely accepted as laudable, some have questioned whether it should really be implemented at the expense of another area of HMRC's operations.
After all, the organisation is supposed to provide fair and equal treatment to individuals and organisations of all types and sizes. In a similar vein, some commentators have questioned whether it is really HMRC's prerogative to make such major changes to the matter of when, how and whether fines are enforced. It is their job, some have suggested, to enforce these laws and not to decide whether penalties should be waived on such a large scale.
Part of HMRC's reasoning is reportedly the fact that the lengthy investigation process into the tax affairs of late submitters usually resulted in their appeal being accepted anyway. While on some levels this does make dropping the investigation seem like the best approach, this has also drawn criticism. Specifically, it has been questioned whether HMRC's penalty system, so recently revamped, can really be fit for purpose if the vast majority of investigations result in no fine being levied.
In short, while taxpayers have welcomed HMRC's decision to waive so many fines, others have said that it shows the system, if not HMRC in its entirety, should be overhauled once again.
About the author
Javeed Baig is a senior accountant and managing director of Gower Accountancy, a Leicester based accountants who provide their services to a range of sectors from doctors and dentists to the motor trade and website developers. They have built a great reputation on their high quality personal and professional service.
Accountant Directory is not responsible for the articles published by members. The views expressed are those of the member who wrote the article.