As the Guardian has reported:
People who filed late tax returns have been let off a £100 fine for missing the deadline, it has been reported.
An internal memo leaked to the [Daily Telegraph] revealed that HMRC staff were asked to write off the fine without further investigation for individuals who could show mitigating circumstances, and who appealed after paying their tax bill.
As they then report:
According to the Telegraph, the memo to HMRC staff said: “Our penalty regime is intended to influence customer behaviour, but also be clear and cost-effective, fair and proportionate.
“The current way of managing penalties does not meet these objectives, and so we have decided to take a more proportionate approach where a customer has filed their return late, and then appealed against their penalty …
“This means that in the vast majority of cases we will be accepting the customer's grounds for appeal, and we can cancel the penalty.”
The explanation given to the Telegraph was:
“We want to focus more and more of our resources on investigating major tax avoidance and evasion rather than penalising ordinary people who are trying to do the right thing.”
This is absurd for several reasons.
Firstly, if penalties are randomly enforced there is no justice. This is ethically wrong.
Second, if penalties are routinely found to be unjust they should not be charged. This action does, then, demand a review of the penalty regime.
Third, if the tax system cannot be enforced then HMRC is very clearly a failing organisation.
The case for reviewing HMRC, its governance, ethics and resourcing is now overwhelming. But when will it happen? And when will we get the Office for Tax Responsibility that is so obviously required?
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Quite a number of tribunal cases recently have shown that HMRC’s interpretation of “reasonable excuse” has been far too narrow. If HMRC have relaxed this over-strict position, then that is all to the good. So long as they don’t go too far the other way, of course.
But they are going the other way
They have admitted they do not try any more: any appeal will do
HMRC does not have the tight to ignore the will of parliament
Mr. M. – surely though HMRC isn’t ignoring the HoC, just making operational changes (as it happens ones you don’t like).
This is not an operational change
Parliament laid down the rules
HMRC is choosing not to apply them
Richard
Are you aware that there have been “technical advisers” in Business Tax for the past 12 months who are untrained? These folks are supposed to give technical advice on the more difficult cases but they are completely untrained in the relevant statute and case law and have no “hands on” experience. They are expected to fit in training modules as and when any are available. I wonder if our political masters would permit, say, an apendectomy being performed on them, by someone who has not even attended medical schoo? Little wonder HMRC performs so badly.
Regards
A disgruntled ex-Inspector
I am aware
I am sorry for those people
I am sorry for those they advise
And I am angry that HMRC management think this OK
I do not
This is just a return to the status quo ante. There were clear penalty provisions for years: and never enforced according to the law. If you tried to follow the law it was not allowed, because it had become “custom and practice” and open to legal challenge on that basis. New legislation abolished that situation: but clearly the govt liked it the way it was. So they have made a policy to achieve that.
Has HMRC actually said they will accept any old excuse? Or will the excuse need to be at least plausible?
How much time and money should HMRC spend in investigating whether or not to charge a £100 penalty?
They have said they will not investigate the excuse offered
to answer your questions
hmrc has said it won’t investigate a list of published excuses, so it has as good as accepted `any old excuse`. in effect, not only has hmrc invited taxpayers to lie to it, it told them what lies to tell to get themselves off.
of course hmrc should not investigate a £100 penalty for this sort of thing, a £100 penalty should be automatic unless the return was received on time. if penalties are to be subject to mitigation/investigation, they should be a lot more [I’d suggest £5 a day for the first month, rising to £10 per day for the second month, etc]