Enter Your E-mail

Busy Practitioner by Mark McLaughlin ATII TEP

This article outlines some key deadlines and practice points for accountants and tax practitioners.Most practitioners will be at their busiest during this time of year, as the normal deadline of 31 January 2003 for filing 2002 Self Assessment returns of individuals (and trustees) becomes increasingly imminent. This deadline seems, invariably, to result in many clients submitting their tax return information to their accountant or tax adviser at the last minute.

There is an initial fixed penalty of £100 (or the actual tax liability, if it is lower) if the return is not delivered by the filing date (TMA 1970, s 93). However the following should be noted.

• For returns issued after 31 October 2002, the filing deadline is extended to three months from the issue date (see TMA 1970, s 8);

• The fixed penalty is potentially subject to mitigation if the taxpayer has a ‘reasonable excuse’ for failing to file the return throughout the ‘period of default’, which begins with the filing date and ends at midnight on the day before the return is delivered (see TMA 1970, s 93(10)).

Filing after 31 January

The vast majority of returns are subject to the 31 January deadline. In Steeden v Carver (Inspector of Taxes) [1999] STC (SCD) 283, the taxpayer’s return was hand delivered to the tax office on the morning of Monday, 2 February 1998, following advice by the tax office to her accountants that returns would be accepted ‘at any time prior to Monday morning opening’. The taxpayer’s appeal against a late filing penalty succeeded, on the grounds that the tax office’s advice amounted to a ‘reasonable excuse’ throughout the ‘period of default’ (i.e. 1 February 1998) (see TMA 1970, s 118(2)).

Following the Steeden case, the Revenue has adopted the following approach:

• Returns found in tax office letterboxes when opened on 1 February are treated as put there on 31 January, and hence filed on time;

• Returns found in tax office letterboxes when they are opened on the morning of 2 February will be treated as put there on 1 February. The return is late but, applying the Steeden decision, no penalty is charged. (N.B. 2 February 2003 is a Sunday this year, so no returns can be delivered by hand on the morning of that day);

• Any returns clearly filed after midnight on 1 February (e.g. by hand or electronically) are late and attract a late filing penalty, unless the taxpayer had a reasonable excuse in the circumstances throughout the period of default (e.g. unforeseen disruptions in the postal service, serious illness of the taxpayer or death of a close relative). However, although a reasonable excuse must strictly continue throughout the period of default, in practice the Revenue will normally allow up to 14 days after that reasonable excuse has ended to file the return (see Tax Bulletin 34, April 1998).

In Working Together (Issue 11) the Revenue confirmed that this treatment would also be applied for 2002 returns due to be filed by 31 January 2003.

Late returns

Whilst returns filed after 31 January 2002 will not attract a late filing penalty in the circumstances described, two points should be borne in mind for practitioners contemplating delivering returns to Revenue letterboxes on 1 February 2003:

• Not all tax offices have letterboxes that can be accessed out of office hours! (N.B. Tolley’s Tax Office Directory 2002 (Second Edition) does note those offices that do have letterboxes.)

• Returns assumed to have been filed on 1 February are still late. This extends the Revenue’s ‘enquiry window’ from 31 January 2004 to 30 April 2004 in respect of self-assessment returns with a normal filing date of 31 January 2003 (see TMA 1970, s 9A(2)(b)).

Happy filing and good luck!