SA Late Filing Penalty- New stricter rules

[PPaul]

As per the new rules, £100 late filing penalty for SA returns will not be cancelled under normal circumstances. This initial penalty will escalate to daily penalties as well as tax geared penalty over the course of the year. If you do not submit your tax return within 12 months from normal filing date, you will face an irreversible penalty of £1,600 even if you have no tax liability to pay or you have overpaid your tax liability. We are extremely worried about these new rules which will be effective from 2010/11 returns.

We feel that these new rules are quite severe, especially during the present times when people are struggling to find jobs and not too keen to submit their returns as they have not worked during the year. Many tax payers are on low income, low tax liability or in tax refund situation or staying on benefits at the moment. We feel that the rules are not justified for cases where a tax payer has overpaid his tax liability but could not file the return in time. The old rule where the penalty was limited to the liability seems to us to be fairer to all.

We do get quite a lot of late tax returns, as it is not feasible, time and cost-wise, to individually contact each client to submit the return in time, especially if you have a large client base. How do other practitioners view the changes? Are we getting overly concerned? It would be good to hear your views on a point wise basis as below-

• Have you started educating the clients? If not what are your plans in this regard? Are you sending emails or via other means like printed brochures/letters etc? We are already sending out the 1st batch of information letters in the coming week or so and will send the second batch (reminder) later in the year.

• Come 31 Jan 2012, what action plan of action have you envisaged for those clients who cannot send in all records and info by 31/1? Will you be sending in estimated returns to avoid the penalties? We have not decided on this issue yet.

• We are especially worried about the period from end of April 2012 because the second batch of penalty (£10 per day for the next 90 days = £900 in total) will commence. By the end of this period (31 Jul) client would have received total irreversible penalties of £1,000 and on 1 Aug this penalty will go up by a further £300 to £1,300. These are exponential rises in penalties which cannot be quashed. You will be aware that around this time of the year, we would start receiving records for 2011/12 as well and it will become a matter of prioritizing the work. Should we complete the returns for 2010/11 first, as they are incurring more and more penalties, or get other clients accounts done who have brought in records for 2012 earlier? What are your thoughts on this and how do you think we should tackle the problem?

• We are aware that there is still some time before 31 Jan but it is not that far away either. We have been following this forum as well and the blogs but to the best of our knowledge haven’t seen these issues being discussed.

Thanks for your views and comments.

[mullet]

We do get quite a lot of late tax returns, as it is not feasible, time and cost-wise, to individually contact each client to submit the return in time, especially if you have a large client base.

To be honest I haven't got much sympathy if someone can't get it all together between April (at the latest, depends on their year end) and the following (say) October/November so that their accountant can do the necessary before the end of January. Maybe the threat or actual imposition of penalties will make such people change their ways.

I know of one small accountant (client base, not stature) who refuses to take on clients with "records" jumbled up in several carrier bags. His policy is that every client must have a properly and regularly completed Simplex/Collins book. I can see where he's coming from, and obviously it's good if you can pick and choose. His clients don't incur late filing penalties.

Sorry, not in a sympathetic mood.

[Incredulum]

I don't have clients, but have no sympathy, sorry. Anyway, if one has no control over one's accounting records, how can one run a business effectively?