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Where Taxpayers and Advisers Meet

Grounds for an appeal against penalties ?

propertygirl
Posts:8
Joined:Tue Aug 15, 2017 7:21 pm
Grounds for an appeal against penalties ?

Postby propertygirl » Wed Aug 16, 2017 10:51 am

Good morning everyone. Thank you for this forum and all the information here, I'm so thankful I stumbled across it ! This will be rather a long post, so apologies, and thanks in advance !
I started a business 4 years ago, in April 2013, managing property. Such that I lease houses ( licensed HMO's-shared houses) on a commercial basis, I then take over all the bills, furnish them, and rent the rooms out individually.
My first tax return was due by January 2015, and I engaged an accountant who was widely promoted by the property industry. My spreadsheets were emailed to him well in advance, in the November. I then heard from a couple of other people, that he'd made mistakes with their returns, so by the second week of January, I made contact with him, to make sure everything was in order. On the phone, I brought up a couple of issues with him, and he assured me they had been taken care of. But when he emailed me my return, for my approval, prior to submitting, these 2 things were not actually on there ! I emailed him back, querying it. He then adjusted the return accordingly, and sent it back to me. There was yet another mistake on there, namely, that he had put my wear and tear allowance as 10% of my gross, and not my net. I emailed him back once again to point out his mistake, expressing my escalating frustration, and his response was to refund me all my fees ( £600 ) because "our relationship had broken down and I had to submit it myself. Which I did. The profit that year was 7k.
I met up with 3 other accountants over the next year, but never found one I felt comfortable with. I think partly because I'd developed a mental block regarding trusting anyone, and partly because I felt that my small business was just too small fry for most of them to be very interested.
The back end of 2015 was an extremely difficult time for me in my personal life, to the point where I was suicidal. I won't go into details. However, I was still managing to run my day to day affairs. I had a very quiet Christmas, and on New Years day, I woke up resolving to myself that it was a new year, and a new start, and I would survive ! One of the houses I had at this time, was not managed by me personally from week to week, I had a girl helping me who did the weekly cleaning, dealt with tenants etc. Over the Christmas period, the house was pretty much empty, all the tenants went home for the holidays. So I decided to go there, and use the opportunity to give it a really thorough deep clean. Within one hour of starting cleaning I realised that the whole house ( 6 bedrooms ) was infested with bedbugs !!!! I couldn't believe it ! It totally freaked me out, and I left. What ensued was me sacking this girl, and months of craziness. Texts and phone calls from tenants at all hours, hours and hours of endless cleaning and hoovering, getting rid of furniture and replacing it, voids, fees to professionals to eradicate it, only for them to come back, crying, hopelessness. It was a really really bad time. I finally got rid of them by the May/June I think.
The same month, January 16, my return for 14/15 was obviously due. I did sit down to do it. However, all I can say, is that with everything else preoccupying me, and demanding my attention, and carrying on running my business, whenever I found the time to sit down and concentrate, it was as if the numbers would just float around the page, and I would end up having a panic attack. I rang HMRC at the end of January, explaining that my return was not done, and what could I do about it ? The chap on the end of the phone told me he could see that I had an extension already, till May 23rd ! Something to do with it was my first year of submitting online/going paperless. I was so relieved ! However, he also explained, that even though I had an extension for the actual return, this didn't transfer to any monies owed. I would still be penalised if these weren't paid. I made a payment over the phone of 4k. (no idea why I came up with that amount )
May came and went, and I was still very much not myself, still fighting these crazy bedbugs, worrying and crying constantly, and running my business. So I missed the extension too.
In the June of 16, , I was involved in a car accident. Taxi went into the back of me, at traffic lights, in the rain. No serious injury, except for whiplash, that did have me in A and E one night 2 weeks later, because I was unable to move, I was in so much pain. The nature of my job is such that it's very physical sometimes. Cleaning, moving furniture, painting and other small maintenance jobs, and gardening etc. I really struggled at this time with it all. But I carried on, as anyone who is self employed knows we have to do.
My tax return just slowly began to feel less and less of a priority. I guess I just developed a sense of apathy about it, and I still couldn't seem to find an accountant I felt I could trust.
Then, in the December of 16, I was in yet ANOTHER car accident. This one much worse, although again, no hospitalisation. Just very severe whiplash. And my car was a total write off. Again. It was not my fault. Guy pulled out in front of me on a dual carriageway...he'd had 12 pints the night before !
I also found out that week, that I was pregnant. It was a surprise, but a very happy one ! Although I did suffer all the usual sickness, tiredness etc, along with the whiplash again, and the physical problems.
So the deadline for the 15/16 return came and went too this last January. I think that the longer it went on, the more immune I became to worrying about it. In April I lost the baby.

So....a colourful couple of years.

4 months ago, I finally found an accountant I feel really really comfortable with, and really supported by. I got my 14/15 done about 2 months ago. 15k profit. I cannot remember the exact figures/proportionsof tax due/penalties, however the whole of the 4k has already gone, and I paid £441 on top. I gave him my 15/16 spreadsheets last Friday,circa 25 k profit and I expect he will get them in by the end of this week.

My accountant is aware of the problems I had with the other accountant, and the crazy bed bug episode, and the 2 car crashes, but not the personal stuff. He advised me to appeal the penalties., albeit, he said it might not help. I was in two minds about it to be honest. After all, I did get very behind, and the penalties are legitimate. However, yesterday I received a message from HMRC notifying me of the penalties for 15/16. £1200 !!! And the tax will be on top obviously . I just do not have this money.

After everything that has happened, I've finally felt for the first time in a long time, that I'm coming up for air, and I'm clearing the decks. This message has made me feel like I've gone 10 steps back, and I just feel despondent again. I am so reluctant to use "personal" matters as grounds for an appeal, and even less reluctant to divulge that information to my accountant to be honest. But the huge bill I now face, has just tipped me over the edge in terms of making that decision.

I think I have to at least try ?

I would very much appreciate the wisdom of anybody's experience on this forum ? Is it worth an appeal, and how would I go about it without involving my accountant ?

Looking back I suppose I could say I wish I had done things differently. However, in all honesty, I don't see how I could have. I had to prioritise. First of all, keeping my business afloat, and cash flowing, which I'm so happy I did. I love my job, and I'm finally at the stage where I'm making a living wage, and things are more stable. And then prioritising my health-both mental/emotional, and physical. I think that speaks for itself. ;)

Again. Apologies for such a long winded post, and thank you for reading if you got this far ! You deserve a cuppa now ! ;) All's well that ends well, and I'm over it, and still standing, and enjoying life/work again !

Propertygirl.

darthblingbling
Posts:698
Joined:Wed Aug 02, 2017 9:09 pm

Re: Grounds for an appeal against penalties ?

Postby darthblingbling » Wed Aug 16, 2017 11:28 am

You could probably argue 'reasonable excuse' for the late filing on the grounds of bereavement and illness:

https://www.gov.uk/tax-appeals/reasonable-excuses

But you cannot argue that you relied on someone else to file for you.

You have an accountant that you trust, if you're comfortable talking about these issues I strongly suggest you get their advice.

propertygirl
Posts:8
Joined:Tue Aug 15, 2017 7:21 pm

Re: Grounds for an appeal against penalties ?

Postby propertygirl » Wed Aug 16, 2017 12:12 pm

Hi Darthblingbling. :)

Thank you.

I'm not comfortable sharing that level of information about my mental/emotional state, nor about my pregnancy. Which I'm sure seems a bit odd, given that I've shared it on here. But here I'm anonymous. I'm quite a private person, and I haven't known him that long, and I wish our relationship to stay on a very firm professional standing.
I won't be appealing on the grounds of relying on someone else. When my old accountant let me down, I filed it myself.

Thank you for the link !

Propertygirl

SteLacca
Posts:448
Joined:Fri Aug 07, 2015 2:17 pm

Re: Grounds for an appeal against penalties ?

Postby SteLacca » Thu Aug 17, 2017 12:57 pm

There has been a case at tribunal fairly recently involving an appeal against penalties on the grounds of reasonable excuse, that excuse being, for all intents and purposes, depression, such that the appellant couldn't manage her day to day affairs.

You have to bear in mind that, when you engage an accountant, you are not just engaging a numbers guy (or girl), but you are engaging someone that you are already entrusting with some of your most personal affairs (your personal financial affairs and position). It shouldn't be a stretch to trust them with some history (that you have, incidentally, posted on a public forum) in order for them to best represent your interests.

I know that, during my career, clients have opened up about all manner of things with me. from my perspective, it's part of the job to be a confidante as well as "the tax guy".

propertygirl
Posts:8
Joined:Tue Aug 15, 2017 7:21 pm

Re: Grounds for an appeal against penalties ?

Postby propertygirl » Fri Aug 18, 2017 6:27 pm

Hi SteLacca,

Thank you for your reply. I think I just posted on here feeling at least I'm anonymous. I had no intention of appealing prior to receiving the message about the extra £1200, so I was just kind of exploring my options really. I've since received an email from him about the extra charges on top of the £1200. I can't honestly work it out. It comes to about 5k ! That is of course my tax due and payments on account, but interest etc.
I haven't been brought up to feel sorry for myself, or use bad times as "currency" if that makes any sense. I just always get on with it. But this just seems insurmountable now, and I don't think I have a choice.
I honestly just don't know if I can share this information with him. I will have to think about it.

Thank you again.

Propertygirl.

darthblingbling
Posts:698
Joined:Wed Aug 02, 2017 9:09 pm

Re: Grounds for an appeal against penalties ?

Postby darthblingbling » Sun Aug 20, 2017 8:00 pm

He's bound to confidentiality by his code of ethics and I'm fairly certain he'd treat the case with a high level of professionalism.

AnthonyR
Posts:322
Joined:Wed Feb 08, 2017 2:33 pm

Re: Grounds for an appeal against penalties ?

Postby AnthonyR » Tue Aug 22, 2017 8:35 pm

If you can't get comfortable with talking him through the issues, explain that you had some personal issues, ask him to put together a template appeal letter for you with a blank space to fill in your story, then fill it in and send it off to HMRC. That way no one has to know the detail, but you're supported in the appeal.
Anthony Rogers LLB CTA TEP
Fusion Partners LLP
anthony@fusionpartners.co.uk

propertygirl
Posts:8
Joined:Tue Aug 15, 2017 7:21 pm

Re: Grounds for an appeal against penalties ?

Postby propertygirl » Fri Sep 01, 2017 2:11 pm

Hi everyone,

I just wanted to thank everyone for your kind responses. I sent off a letter, detailing every circumstance, and evidence of each one 2 weeks ago. I haven't heard anything yet, but wanted to give an update, and to thank everyone. I will post the outcome on here, so it supports anyone else in my position in the future. Am also delighted to tell everyone I have also submitted my 16/17 to my accountant !!!! Woo woo. I honestly feel as if I've been let out of prison, and want to encourage anyone who has maybe got themselves in to a pickle, as I did, that just making small steps in the right direction, gets you there in the end. It felt to me like an insurmountable mountain to begin with, but I just kept at it, and the relief I feel is amazing ! Good luck ! :D

propertygirl
Posts:8
Joined:Tue Aug 15, 2017 7:21 pm

Re: Grounds for an appeal against penalties ?

Postby propertygirl » Wed Sep 13, 2017 12:55 pm

Hi everyone.

Just got letter this morning from HMRC, cancelling EVERYTHING !!! :D :D :D

I feel like I've won the lottery ! After 2 years of this hanging over me, I've got through to the other side finally, and I'm actually ahead ! With the money that I've already paid, and having already done my 16/17.

Just want to really encourage anybody that might be reading this, who may be in a pickle, get yourself a good accountant, who can make you accountable, and give you support and advice. And talk to the inland revenue. They really aren't as scary as you think. Every time I've spoken to them they've been really kind, and respectful. I buried my head in the sand for far too long, didn't ask for help, and it made things far worse for me than they needed to have been.

Thank you again, for the people that responded to me.

:-)

darthblingbling
Posts:698
Joined:Wed Aug 02, 2017 9:09 pm

Re: Grounds for an appeal against penalties ?

Postby darthblingbling » Wed Sep 13, 2017 3:38 pm

Warms the heart, really does. Happy to hear HMRC saw reason.


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