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The number of penalties issued by HMRC for late payment of tax or late filing of tax returns overturned on appeal soared 70% in 2023/24, according to new data from Price Bailey.
The accountancy firm found that 35,876 penalties were cancelled on appeal in 2023/24, compared to 21,071 in 2022/23. It also found that 74% of penalties were overturned on appeal in 2023/24, up from 69% the previous year.
Price Bailey said that “persistent” delays with HMRC’s telephone helplines led to a surge in taxpayers being issued with automatic late filing penalties. The day before the tax return deadline, callers to HMRC’s self-assessment helpline were “frequently waiting longer than 40 minutes before speaking to an adviser”.
Andrew Park, Tax Investigations Partner at Price Bailey, said: “This is a staggering number of penalties to be cancelled and underscores just how vital HMRC’s helplines are in helping taxpayers meet filing deadlines and pay the right amount of tax.
“Even if taxpayers can get through to an adviser, they often lack the relevant expertise to provide the proper advice. This can lead to errors on tax returns, which HMRC generally doesn’t accept as reasonable in disputes over tax decisions. Persuading HMRC that the taxpayer was wrongly advised by a member of staff can be very time-consuming.”
He added: “It is unjust that these penalties were automatically generated even though the fault lay with HMRC. While there is some consolation in HMRC’s willingness to overturn penalties, fines can be very stressful for taxpayers, particularly at a time when many people are struggling to make ends meet.”
Price Bailey noted that in March this year, HMRC also announced plans to close its tax helplines for six months every year from early April until 30 September but “swiftly u-turned” following concerns that many taxpayers would be left unsupported.
HMRC’s customer service staff numbers decreased from 20,139 in December 2022 to 18,996 in December 2023.
Park concluded: “The customer service team suffers from high attrition and new recruits often find it harder to give the right advice. This is compounded by the culture of remote working, which is less conducive to junior staff learning from more experienced colleagues.”
