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- KEY POINTS
- Downloading a return? Remember: there are now two personal tax forms.
- Exactly when must the return reach HMRC?
- Will the postal strike be a reasonable excuse?
- The removal of the £100 penalty cap.
- Why haven’t we seen so much of Moira Stuart?
I was dreaming about that nice Moira Stuart the other day. We were running hand in hand across the sun-kissed sands of some exotic Caribbean island.
Strangely, Moira was wearing her boots and maxi-skirt (how very 1970s, I was thinking) and carrying a mop and bucket, something to do with her TV appearances as the face of HMRC seemingly being confined to cupboards and office kitchens.
I had two boxes of uncompleted tax returns, one under each arm – the left one was marked ‘Tax Return (Issued before 1 August 2009) SA100’, while the other said ‘Tax Return (issued after 31 July 2009) – SA100 (Li man)’.
‘Li man’, I was saying to myself. ‘Shouldn’t that be li-lo?’ That was something that I could have made use of, bobbing around on the waves, just me and my tax returns, while being served with something long and cooling by the long and cooling Moira.
That salt water’s not going to do her boots any good at all, I thought. All of a sudden the sand started sliding away from beneath my feet in a swirling motion and I was falling, falling, falling – falling down the tube of a giant egg timer.
Adam Hart-Davies plummeted by screaming, ‘What I said about HMRC: I didn’t mean it. Tax really doesn’t have to be taxiiiiiinnngg’.
I awoke with a thump and a sharp pain as Volume 1B of Tolley’s Yellow Book hit my right foot. I can only think that I must have dozed off reading FA 2004, s 232 ‘cash balance arrangements: adjustments of closing value’.
Same time last year
I think that what might have brought about my dream or nightmare, probably depending on whether you were me or Moira Stuart in it, was that I was cleaning out my notes from last year (perhaps that’s where the mop and broom came from) and spotted my article Can I have a date?
There, I mentioned what a coincidence it was that HMRC had brought out tax returns with different front pages depending on whether they were issued before or after 1 August shortly after I had pointed out that the original return was a little misleading.
This was because the front page of the original form said that there was a 31 October deadline for a paper form, whereas if this was printed from the website, say because the original form issued in April had been mislaid, it said that there were three months to return the form.
Having awoken from my Moira Stuart-based daydream and, realising that I hadn’t seen so much of her smiling face lately, I decided to visit HMRC’s website to see what the returns look like this year.
We still have the two versions of the tax return form and the unrepresented taxpayer may continue to find this confusing, but serves them right for not having a Taxation reader representing them, I guess.
The pre-1 August 2009 issue form is referenced ‘SA100 2009’, while the post-31 July 2009 issue form is designated ‘SA100 (Li man)’. HMRC advise that ‘Li man’ stands for ‘late issue manual process’.
31 October
Is it just a coincidence that the paper tax return filing date is Halloween? I don’t think so; and while we are watching kids run around dressed up as little devils, this might serve as a timely reminder that ‘the devil is in the detail’ regarding the filing date itself.
On their website, HMRC do point out that ‘the deadline for paper tax returns is only normally later than 31 October if:
- you received your tax return or a letter (called a “notice to file”) telling you to file online after the 31 July; or
- there's no software available to file your tax return online for example non-resident companies.'
So if you do not fall within one of the above two categories, HMRC’s website instructs that ‘if you send in a paper tax return for the 2008-09 tax year, it must reach HMRC by midnight on Saturday, 31 October 2009’.
Saturday is an added complication as I can’t imagine that there will be many HMRC employees working over the weekend; plus we have the usual implications of the decision in Steeden v Carver [1999] SSCD 283 (SpC 212).
After recommending that returns should be posted in time to arrive by 31 October, HMRC summarise the actual position as follows:
‘Please note the following points for tax returns that you deliver by hand:
- Tax returns that are in an HMRC office letterbox when it’s first opened on Monday, 2 November will be treated as being received on the 31 October and you won’t have to pay a late filing penalty.
- Tax returns that are in an HMRC office letter box when it’s first opened on Tuesday, 3 November or delivered to an HMRC office by hand on Monday, 2 November will be treated as being received on the 1 November. You won’t have to pay a late filing penalty, but HMRC will have longer to start a check into the tax return – until 31 January 2011 rather than 31 October 2010.
- If your tax return has been delivered by post on the above dates or if you’ve delivered it by hand to an HMRC office on Tuesday, 3 November, it will be treated as being received on the day of receipt and will attract a late filing penalty.’
A further spanner in the works is the current postal dispute. The suggestion is that returns can be hand-delivered to a local tax office – if you have one. Those doing this should note that HMRC will not be providing proof of receipt as this is seen as a waste of resources – staff are there to help and advise, not to issue receipts.
For those trusting their returns to the Royal Mail, HMRC have advised me that ‘having a paper return stuck in a postal strike counts as a reasonable excuse under our long standing guidelines’ and refer to leaflet SA355.
The department have also included a page on their website specifically referring to the postal dispute. This also confirms that ‘you won’t have to pay a penalty if you miss the deadline because of the postal strike – providing you post your return before 31 October’.
However, if a return is received late there is some doubt that simply saying that the return was ‘in the post’ will be sufficient. Some form of proof of posting or perhaps sending the form by registered post might well prove to be worthwhile.
Paying the penalty
There is also a slight difference in wording between the pre- and post-1 August issue forms regarding penalties and the payment of tax. The pre-1 August 2009 issue form states that ‘you will be charged a £100 penalty if your tax return is received after the appropriate deadline. If you pay late you will be charged interest and possibly a surcharge.’
By comparison, the post-31 July 2009 issue forms states: ‘you will be charged a £100 penalty if your tax return is received after the appropriate deadline. You must pay any tax due by 31 January 2010. If you pay late you will be charged interest and possibly a surcharge’.
Quite why the former return doesn’t mention the payment date while the latter was a mystery to me. HMRC’s explanation is that ‘there is a limited amount of space on the front page of the return in the ‘Your Tax Return’ space in which to have the statutory notice wording, deadlines and other key information about filing the return.
On the pre-1 August issue version of the return, the payment wording has had to be condensed because of the ‘Please note the new filing date for paper returns’ line in the red deadlines box’.
Fair enough I suppose, but what both forms again neglect to point out is that the penalty for personal self assessment returns is capped to the level of the outstanding liability on 1 February and that there will be no penalty if the tax liability is paid on or by 31 January following the fiscal year end.
This omission is repeated elsewhere on HMRC’s website. For example, the page ‘Tax return deadlines and penalties’ states that 'if the paper return arrives after this deadline you’ll be charged an automatic £100 penalty’.
HMRC also issued a press release on 19 October stating ‘leave it too late and you could end up with a £100 late-filing penalty’. No mention of capping, which applies of course even if the 2008/09 return is filed after 31 January 2010, although the return will need to be filed to prove that the outstanding liability is nil or less than £100.
I did point out in last year’s article that the potential penalty for the late filing of a paper tax return could not be beaten by subsequently filing a return electronically. Practitioners should also note that ‘capping’ does not apply to late partnership tax returns.
Any practitioners dealing with partnerships should remember that HMRC do not provide free software for online filing of partnership returns. This seems to have caught out a number of practitioners last year who only discovered this in the days before 31 January 2009.
A complaint not upheld
To be fair, perhaps I am being unduly alarmist on this point. The Advertising Standards Authority obviously thinks so: a complaint was made against the Adam Hart Davies advert in 2007.
As the sand trickled through a large hourglass, the advert showed Adam Hart-Davis saying: ‘time is running out. Send in your self assessment tax return by 31 January or you’ll get a £100 penalty and start getting charged interest on anything you owe. You need to do it now’.
The complainants (a tax consultant and a chartered accountant) felt that the advert was misleading because it implied that all individuals who failed to file their tax return before 31 January would receive a fine of £100; and it used fear to encourage consumers to submit their tax return before the deadline date.
In the event, neither complaint was upheld. The ASA agreed with HMRC’s contentions that ‘clear, no-nonsense messages about the tax deadline were both expected and appreciated by the public and … the January campaign continued to improve public perceptions of the department’.
HMRC did, however, apologise to the complainants ‘who had found the ad’s tone distressing and its message confusing’, but the department said that their reports showed that the advert was ‘particularly well received’.
The ASA’s conclusion was that ‘because the fine was automatically generated and applied in every circumstance of late submission, there was no consumer detriment in alerting viewers to it’.
Automatic penalty
Just to add to the uncertainty, FA 2009, s 106 introduced Sch 55: ‘penalty for failure to make returns, etc’.
Section 106(1) states that ‘Sch 55 contains provision for imposing penalties on persons in respect of failures to make returns and other documents relating to liabilities for tax’.
Schedule 55 para 1 follows this up by providing that ‘a penalty is payable by a person (“P”) where P fails to make or deliver a return, or to deliver any other document, specified in the Table below on or before the filing date’.
The table referred to includes returns issued under TMA 1970, s 8(1)(a) and s 8A(1)(a) – personal and trustee returns – amongst others relating to income tax, corporation tax, stamp duty land tax and petroleum revenue tax. Section 106(2) adds ‘that Schedule comes into force on such day as the Treasury may by order appoint’.
Sch 55 para 3 provides that the initial penalty will be £100 and unsurprisingly there is no capping. Practitioners should also note that para 4 provides for daily penalties of £10 if a return is not filed after three months.
This is less than the current provision for £60, but this would need to be confirmed by the tribunal on application by HMRC. The £10 penalty is imposed by HMRC, but it should be noted that this can be backdated. Additional penalties will become due if the return remains unfiled after six or twelve months.
This started me wondering whether we are now going to end up with an annual worry as to whether this provision has come into force or not.
My recollection is that there are similar worries regarding an automatic penalty for the non-submission of forms P11D as opposed to the P11D(b) which does have an automatic late filing penalty.
Perhaps HMRC believe that this keeps us all on our toes anyway. Possibly it does, but in the meantime HMRC advise me that the capping of penalties will not be removed ‘before April 2012 at the earliest’.
Where’s Moira?
So is it just me or have we not seen so much of Moira this autumn? I was expecting to see her shining face gazing longingly at me from roadside hoardings and newspaper pages, but other than one ill-remembered newspaper advert I can’t recall seeing her. Moira, where are you?
HMRC advise that adverts were put in the national press during October, but as far as catching a glimpse of her on the telly is concerned, HMRC disappointingly state that ‘we are not running TV or radio ads in October’.
My heart sank, but rose on the news that they ‘will be running radio and press ads in November to encourage people to register for the online service’. The paper tax return filer’s loss is my gain.
So using a policy combination of stick (‘watch out there’s a £100 penalty’) and carrot (‘allow yourself more time and file online’), HMRC are positively encouraging online filing.
The department say that as at 11 October 2009, 1,940,924 self assessment tax returns had been received online, compared to 1,597,340 online returns received in the same period last year – an increase of 21.51%. Good news for HMRC, but this still didn’t tell me what had happened to Moira.
It might also be churlish to mention at this point that the department’s annual report for 2009 shows that complaints against its online services have risen from 514 in 2007/08 to 1,443 in 2008/09. To me, that looks like an increase that’s ten times as much as the increase in online filing itself.
But back to Moira. I started to ask around and a couple of rumours reached my ears. One was that HMRC had prepared an advert showing here standing next to a bright red post box; possibly a case of bad timing bearing the recent industrial dispute at the Royal Mail.
Another thought is that in addition to the ‘stick and carrot’ approach there might also be a policy of ‘keeping schtum’ for the time being; presumably the reason that we will be seeing her in November.
Perhaps HMRC would rather not remind taxpayers of the 31 October deadline. If the date were to, let’s say, slip by unnoticed (after all, everyone’s getting dressed up for Hallowe'en or buying their fireworks), then taxpayers will have to file online.
Those taxpayers that couldn’t or wouldn’t do this would also then be facing a £100 penalty – or at least they might think they were if they hadn’t read this article.
