£100 fixed Late filing penalty Limitation- to be abolished?

[PPaul]

Is it true that this penalty is going to stand regardless of the amount of tax due? Up until now, the penalty would have been quashed if you had no liabilities outstanding so long as the payments were made before filing date or were due a refund. In the self-assessment guide, published in accountingweb.co.uk, Rebecca Bennyworth also seems to suggest the same- “It is worth reminding clients that this capping process is abolished by Finance Act 2009, so will not protect them from their tardiness in future (probably from January 2011)”. Please see article http://www.accountingweb.co.uk/topic/tax/accountingwebcouk-guide-self-assessment/396954#late.


If this is the case, would it would not be a severe blow to thousands of tax payers who have overpaid their tax at source, but had not submitted their returns, due to various reasons? It seems too punitive and unfair, in a scenario where a taxpayer would have already paid all his liability. Also, for all subcontractors on CIS basis it seems unfair as they look forward to receipt of numerous years tax refunds at one go. What do others think? Are there provisions to appeal for reasonable excuse? Will they be considered? Should we get our Institutes involved and ask them to defeat/delay this provision?

Thank you for your comments

[robbob]

Hello PP

It costs the revenue time and money to chase individuals who do not sumbit tax returns - i am happy for an individual who files their return late and causes this extra hassle to pick up the tab for this whether they are due a refund or not.
10 months is more than enough time for 99.5% of taxpayers to submit their returns on time.

I feel for sorry for anyone working within CIS - the legislation (monthly cis returns particularly) is very burdensome and i think it is discrimatory in the extreme that individuals who are probably least able to cope with this system have to whereas architects/surveyors and others doing similar work get away without all the extra hassle.

[maths]

Is it true that this penalty is going to stand regardless of the amount of tax due?

Correct; section 106 and Schedule 55 of FA 2009. However, I believe these provisions come into force on a day as yet to be appointed although it appears that they will be effective from 6th April 2010 (i may have missed the appointed day notice).

If this is the case, would it would not be a severe blow to thousands of tax payers who have overpaid their tax at source, but had not submitted their returns, due to various reasons?

Possibly.

Are there provisions to appeal for reasonable excuse?

Sort of.

Will they be considered?

Sort of.

Should we get our Institutes involved and ask them to defeat/delay this provision?

Can't comment other than to say probably a complete waste of time; however, i am now old and cynical.

[AvocadoK]

Although the HMRC powers / penalties doubtless go too far, I don't think it unreasonable to require taxpayers to submit an annual tax return within 10 months of the tax year end. In the bad old days before self assessment, returns were often submitted two or three years 'late' - at least the current system does get the vast majority of the returns submitted. I am sure HMRC would welcome suggestions as to how to encourage the laggards - is it too controversial to suggest that maybe £100 is not enough of a penalty?

The new legislation does provide for reasonable excuse, and the new review system is a positive step in that it allows someone else in the Revenue to review a decision over a penalty. Our experience with VAT is that the review system works well, so give it a go!

AK

[Incredulum]

There's a world of difference between a laggard - who is costing the country money on account of being tardy in submitting his return and paying his tax - and somebody who is due a repayment.

Surely?

[robbob]

I think the problem is that the revenue don't know the difference between a laggard who is due a refund and a laggard who owes money until they get the o/s returns.
Therefore they will have to waste time and money chasing the person to find this out - so the laggard really is making the situation harder than in should be for the revenue.