What does Brexit have to do with self assessment late penalties? An excellent question.
On the surface of it, they seem totally unrelated. But, due to preparations for Brexit, HMRC is another government department under enormous pressure and this has an inevitable affect on their everyday workload.
Will I pay a bigger self assessment tax return late filing fine?
The issue with the self assessment penalties is delayed administration. HMRC need to divert staff into Brexit related work and therefore will not be issuing the late filing warning letters in February as usual. They predict that these will be sent towards the end of April instead.
The reason this may result in larger fines is that the self assessment late filing system is cumulative. This means that the automatic £100 fine stands until the end of April and then goes up daily by £10 until your self assessment tax return is filed and the fine is paid. So instead of just paying £100, the 746,000 late filers could end up paying considerably more.
Why are HMRC not doing what they usually do?
HMRC’s statement says: “We expect an increased demand in our call centres as the UK leaves the EU, so we intend to delay the issue of these notices to ensure we can provide the best service to our customers. This will release those staff for EU exit related work. We will issue daily penalties to individuals who have still not filed three months after the deadline, in appropriate cases, at the normal time.”
They are being asked to do more work with the same amount of staff, so priorities must be decided.
An HMRC spoke person said: “No-one will be unfairly penalised as a result of this change. The vast majority will be aware they missed the January 31 filing date, as we do remind regularly with nudge messages before the deadline. The latest date letters will go out is April and this will still leave customers several weeks to contact us. This is sensible planning to make sure we focus our resources on delivering important functions in the event of a no deal [Brexit].”
Why is this a problem for taxpayers?
It might be the case that taxpayers are genuinely unaware that they were obliged to file a self assessment tax return for the 2017-18 tax year and they won’t be receiving the warning letter until they have entered the second phase of penalties.
As reported by the BBC, Association of Taxation Technicians’ Jon Stride, said: “If the £100 penalty notice is issued by HMRC at the end of April, a taxpayer may, by the time the notice hits their doormat, already be incurring additional penalties.” He would like HMRC to give reassurance that their late administration of fines will not lead to people unfairly paying a higher fine.
What should I do about my self assessment tax return late filing fine?
If you know that you need to file a self assessment tax return for the 2017-18 tax year and you missed the 31st January 2019 deadline, do something about it now. You don’t need to wait until you hear from HMRC. Remember, you are fined twice, once for missing the filing deadline and once for paying your tax bill late. Even if you’re worried about paying your tax bill, getting your tax return submitted at least stops that chain of fines accumulating. Get in touch with HMRC or a tax professional as soon as possible to get things in order. One thing is certain, the longer you leave it, the larger the penalty will be.