Have you missed the 31st January deadline and need to provide a “Reasonable Excuse” to HMRC? Below are some of the top 10 worst excuses, which have actually been used …
- My wife won’t give me my mail (self-employed trader)
- Our business doesn’t really do anything (Kent financial services firm)
- My tax papers were left in the shed and the rat ate them.
- I’m not a paperwork orientated person – I always relied on my sister to complete my returns but we have now fallen out.
- My bad back means I can’t go upstairs. That’s where my tax return is (a working taxi driver)
- A wasp in my car caused me to have an accident and my tax return, which was inside, was destroyed.
- I had an argument with my wife and went to Italy for 5 years
- I’ve been busy looking after a flock of escaped parrots and some fox cubs
- I’ve been travelling the world, trying to escape from a foreign intelligence agency.
- I’ve been too busy submitting my clients’ tax returns (London accountant).
The Revenue said that the excuses were all declined on the basis that they were either untrue or not good enough reasons. Ruth Owen, HMRC director general of customer services, said, “Blaming the postman, arguing with family members and pesky insects – it’s easy to see that some excuses for not completing a tax return on time can be more questionable than others. Luckily, it’s only a small minority who chance their arm.
“But there will always be help and support available for those who have a genuine excuse for not submitting their return on time. If you think you might miss the 31 January deadline, get in touch with us now – the earlier we’re contacted, the better.”
What are the Penalties?
The penalties for late tax returns are an initial £100 fixed penalty, and additional daily penalties of £10 per day, up to a maximum of £900, after three months.
After six months, a further penalty of 5% of the tax due or £300 is imposed, and after one year, another 5% or £300.
There are also additional penalties for paying late of 5% of the tax unpaid at 30 days, six months and 12 months.
How can a taxpayer appeal?
It’s worth knowing that if you miss the deadline for a legitimate reason you can appeal as long as your excuse is ‘reasonable’.
- The phrase “reasonable excuse” takes its everyday meaning however the courts and tribunals have their views on this.
- A taxpayer is expected to know which deadline applies and make a reasonable effort to meet those deadlines … they have 9 months to submit
- Reliance on the acts of a third party is no defence for VAT penalties, but it is a defence for direct tax penalties in certain circumstances.
What is a reasonable excuse?
“Reasonable excuse” is not defined by the legislation, but HMRC original view that an excuse is reasonable where some “unforeseeable and exceptional event” beyond the taxpayer’s control is reasonable.
These sort of circumstances that might be reasonable will include:
- Strike Action or system failure at HMRC
- Insufficient funds is not a reasonable excuse for a failure unless it is attributable to events outside the taxpayer’s control, which may include:
- Bankruptcy of a major supplier
- Sudden withdrawal or cut in bank funding
- Government cuts if affecting a supply chain
- Illness – The taxpayer or a close family member.
- Postal delays – You cannot just use the excuse that the postman did not deliver the letter, you will need to provide proof of postage.
- Accident or disaster:
- IT failure: the taxpayer’s computer breaks down or catches a virus just before or during the preparation of an online return.
- Electrical failure or broadband failure.
Where a taxpayer had a reasonable excuse for a relevant act or failure but the excuse ceased; he is expected to remedy the situation without unreasonable delay.
Failing to act promptly in those circumstances will deny relief on the grounds of reasonable excuse.
Making a successful appeal
Do not bury your head in the sand, act quickly, if you need help contact Tax and Financial Solutions Limited and we can work with you through the process.
If there is no reasonable excuse get your tax return submit to avoid any further fines.