HMRC: A case of Jekyll and Hyde?

Her Majesty's Revenue & Customs (HMRC) have certainly been busy this month, announcing new amnesties and issuing penalties in an approach more akin to the tale of Jekyll and Hyde than the usual manner of the tax authorities.  Lets take a review of some of the last months edicts from HMRC.

 

New style penalties have been issued to around half a million tax payers in the last month for those who still haven't filed their 2010/11 tax returns.  New penalties were introduced in April 2011 to boost the incentive to file and reduce the costs to taxpayers of chasing up missing forms. As a result, anyone who ignores their Self Assessment filing obligations is now liable to higher penalties than in previous years.

 

The penalties issued this month will be for a minimum £1,200, comprising:

• the maximum £900 in daily penalties for non-filing
• a further late-filing penalty of £300 or 5 per cent of the tax due (whichever is higher).

People who receive a late-filing penalty can appeal against it if they think they have a reasonable excuse for not sending their tax return; for example, a family illness or bereavement.

 

On the flip side of HMRC's personality we see a tax amnesty for those having not filed their tax returns for 2009/10 and earlier years.  If HMRC have sent you a Self Assessment tax return or notice to complete a tax return for 2009-10 or earlier and you have not yet taken any action, HMRC are offering you a quick and straight forward way to bring your tax affairs up to date. There is also a dedicated telephone helpline to support you, which can be found here http://www.hmrc.gov.uk/campaigns/tri.htm .

 

So, we see HMRC really hitting hard those who have still not filed their tax returns for 2010/11 (which should have been filed by 31 January 2012), but seemingly letting off the hook those that have reneged in earlier years.  An odd approach to take, and you may call me a cynic, but it does make sense from HMRC's point of view.  The 2010/11 defaulters are easier to identify and the potential penalties are far greater, whereas the older late filing issues have very minimal penalties attached to them.  So, what we are seeing here with HMRC is a combination of a very commercial attitude towards risk and return (something that has been evident in the corporate world of tax for some time) seeping into the domain of personal tax, whilst offering a carrot to those that offer a lower reward to chase down.

 

N.B. Should any of the above affect you, I'd be more than happy to offer advice and assistance.