31st January: dare you miss the deadline?

All self-assessment forms must be filed by the end of January 2016 and accountants are busy reminding their clients of the red-letter day in the calendar. But how much risk do you really run by being late?

The rules themselves seem very straightforward. There’s an automatic minimum penalty of £100 if you fail to file your self-assessment tax return on time. It may not be the most severe of fines, but it’s probably enough of an incentive for most of us to get our act together and pull together the necessary figures.

Amazingly, however, some 900,000 people failed to meet the deadline for tax year 2013/14. That meant, of course, that a large number of automatic penalties were issued during 2015. What the Revenue hadn’t anticipated was the large number of recipients who chose to appeal against their fine.

It’s true that a ‘reasonable’ excuse was enough for a miscreant to be granted a reprieve, although HMRC have very stringent criteria for the excuses that they considered to be reasonable. These include unexpected stays in hospital, serious illness, as well as fires, floods and theft.

It was the sheer volume of people appealing their penalty, however, which led to a very large backlog and a big administrative headache for civil servants. Reports soon emerged that a decision had been taken internally at HMRC simply to accept appeals in the majority of cases without questioning the specific circumstances.

So does this mean we can rest on our laurels in 2016 and not worry too much if we slip up on the deadline?

Most accountants would probably advise their clients to err on the side of caution. We simply don’t know what the regime is going to be like moving forward. In a press release, however, HMRC did indicate that it wanted to abandon automatic penalties if someone had just missed a single deadline and concentrate instead on targeting persistent offenders.

Whatever the signals, when you’re talking about the world of tax, it’s usually better to be safe than sorry. So that means getting your paperwork in order and your online form completed by January. Talk to your accountant as soon as possible if you have any queries or concerns.