Register Newsletter
This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. To find out more about cookies on this website and how to delete cookies, see our Cookie Policy.
Decline Settings Accept
Analytics

Tools which collect anonymous data to enable us to see how visitors use our site and how it performs. We use this to improve our products, services and user experience.

Essential

Tools that enable essential services and functionality, including identity verification, service continuity and site security.

Where Taxpayers and Advisers Meet
When can a tax return not be filled in?
25/08/2012, by Low Incomes Tax Reform Group, Tax Articles - Income Tax
4199 views
0
Rate:
Rating: 0/5 from 0 people

LITRG is supporting the proposal that HMRC should have a statutory power to withdraw a notice to file a self-assessment return.

Background

Normally, if you are sent a tax return, you have to fill it in, even if HMRC agree that you should not be in self-assessment and agree to take you out of the system for future years. But early in 2012, HMRC announced that if an individual could demonstrate that the return they had been sent was unnecessary, they would permit them not to file it.
 
Since then, HMRC have consulted on including this discretionary power in legislation, a step which LITRG would welcome. 

Late-filing penalties – the new rules since April 2011

Since April 2011, penalties for not filing a return on time have increased sharply. Now the late-filing penalties are:
 
  • an initial £100 fixed penalty for returns outstanding from the day after the filing date; 
  • if the return is more than three months late, a daily penalty of £10 per day until the return is filed, for a maximum of 90 days (up to £900); 
  • where the return is six months late, a further penalty equal to 5% of the tax liability on the return, or £300 if higher;
  • if the return remains outstanding after twelve months, a further penalty of 5% of the tax liability, or £300 if higher. 
 
If they do not receive a return, HMRC may ‘determine’ (that is, decide what they think the taxpayer owes) the amount of the tax liability and calculate the 5% ‘tax-geared’ penalty on the basis of that estimated amount. When the return is received, HMRC will then adjust the amount retrospectively to reflect the actual liability, although with very late returns, the determined amount might be regarded as final. 
 
Before these new penalties were introduced, it was possible to ‘cap’ the amount of certain penalties by the tax outstanding. Thus, if the tax due was less than the amount of the penalty, the penalty would be restricted to the amount of tax outstanding on the due date. For example, if a taxpayer was due to pay a £100 penalty for late filing, but their tax bill had been paid in full and on time, the penalty would be scrapped. 
 
Under the new rules, it is not possible to avoid a late filing penalty by paying the tax, but late-filing penalties can be cancelled if the taxpayer has a reasonable excuse for filing late.

LITRG response to HMRC’s consultation

LITRG’s full response to the consultation on withdrawing a notice to file a tax return is available for download from their website.

About The Author

The Low Incomes Tax Reform Group (LITRG) is an initiative of the Chartered Institute of Taxation to give a voice to those who cannot afford to pay for tax advice. LITRG comprises tax specialists from professional practice and the voluntary sector, from publishing and from HM Revenue & Customs, together with people from a welfare benefits and social policy background. Visit www.litrg.org.uk for further information.
Back to Tax Articles
Comments

Please register or log in to add comments.

There are not comments added