Not feeling (a) fine? You might have a ‘reasonable excuse’ for not completing your tax return
If you’re not expecting to complete your Self Assessment tax return by the deadline of midnight on 31st January, you’re not alone. Last January around 870,000 taxpayers missed the 2016 tax deadline and paid a £100 fine, plus extra penalties in some cases. If you’ve not been able to complete your tax return in time, here’s what you need to know.
The world is not going to end if you miss the deadline - filing your tax return a couple of days late will earn you nothing worse than a £100 fine at this stage (although HMRC will also charge you interest if you have failed to pay your tax on time too).
However, you still need to act, and quickly. Remember that the longer you take to submit your Self Assessment tax return after the deadline, the more fines you will incur – so that initial £100 penalty may start getting larger! HMRC may also start to charge additional penalties depending on how long it takes you to pay your tax. The quicker you submit your tax return and pay your tax bill, the better.
Appeals are possible with ‘reasonable excuses’
HMRC does allow appeals against penalties for late returns, if there’s a reasonable excuse (defined as “something unexpected or outside your control that stopped you meeting a tax obligation”). HMRC aims to treat those with genuine reasons leniently, as it seeks to focus its penalties on deliberate tax evaders and those who persistently fail to complete their tax returns.
Life happens, so if you have a valid reason as to why you couldn’t complete your tax return, HMRC will consider your appeal and make a decision about whether they consider your excuse to be reasonable.
What counts as a reasonable excuse?
A reasonable excuse is normally something such as a serious illness, or a death in your immediate family. Other examples of reasonable excuses might include:
- an unexpected stay in hospital
- a serious or life-threatening illness
- your computer or software failing just before or while you were preparing your online return
- a system failure with HMRC’s online services
- a fire, flood or theft preventing you from completing your tax return
What won’t cut it as a reasonable excuse (spoiler: wasps in cars)
HMRC receives some pretty interesting appeals! In the past, these have included “a wasp in my car caused me to have an accident and my tax return, which was inside, was destroyed” and “my husband told me the deadline was 31st March”. Needless to say, these reasons were not accepted as reasonable excuses, but there are also some more pedestrian excuses that have been refused in previous years. These have included:
- relying on someone else to send your return who has then failed to do so
- your cheque bouncing or payment failing because you didn’t have enough money
- finding the HMRC online system too difficult to use
- failing to receive a reminder from HMRC
- making a mistake on your tax return
If you relied on your accountant to complete your Self Assessment, but they failed to prepare and submit your tax return on time, you may think that would be a reasonable excuse for missing the deadline. Unfortunately this is not the case, as HMRC still hold you responsible for your own tax affairs even if you have used an accountant.
What to do next
If you believe you have a reasonable excuse, you need to let HMRC know as soon as possible. If you miss the deadline then HMRC will send you a penalty notice, but you don’t have to wait until they do; fill in and submit a claim form as soon as possible. You must also send your return or payment as soon as possible after your reasonable excuse is resolved.
If in doubt, speak to your accountant and get their advice on whether you have a valid excuse for missing the filing deadline or not, or contact HMRC directly to explain your circumstances.
If you’re facing an appeal, best of luck in getting it resolved. If your experiences this year have inspired you to get organised, FreeAgent can make taking control of your business finances easier in the future. Take a look at how using FreeAgent makes Self Assessment less stressful.
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