UHY Hacker Young is urging taxpayers who receive penalties after the upcoming 31 January self-assessment tax deadline to appeal if they believe the fines were wrongly imposed.
It comes as the firm notes that HMRC cancelled over 60% of late payment penalties last year. Data obtained by the firm revealed that of the £275m in penalties imposed for late payment of self-assessment tax in 2020, £167m was later completely cancelled.
According to UHY, this highlights the importance of taxpayers ensuring that HMRC’s reason for the penalty is correct and appealing against it “if necessary”.
HMRC has confirmed that personal or business “pandemic-related” disruption may be a reasonable excuse for late filing of tax returns this year.
UHY added that HMRC’s “more understanding” approach towards late filing suggests this may also be the case with the late payment of tax.
It warned that taxpayers should not rely solely on HMRC being “more cooperative” as a result of the pandemic, however, and that where possible, taxpayers should pay their tax bill if they can afford to, or at least negotiate payments.
It added that some taxpayers will be facing a much larger tax bill than usual, as many are likely to have deferred their July 31 2020 tax payment last year. This ‘double bill’ is now due to be paid by the upcoming deadline.
Graham Boar, partner at UHY Hacker Young said: “It’s extremely important that taxpayers appeal any penalties they do not agree with. HMRC certainly gets it wrong at times and will correct its mistakes when presented with the evidence.
“Ultimately, taxpayers will be responsible for spotting any mistakes straight away, as once HMRC receives a payment, in their eyes the case is closed and won’t be looked at again.”
He added: “Individuals who fear they will be unable to afford their upcoming tax bill need to act now and begin negotiating with HMRC. They should be able to stagger their payments through a Time to Pay arrangement but that’s down to the taxpayer to arrange.”