DriverTax: How does the HMRC think that the average self-assessment filer is going to become super d

Are you a receipt bagger or a digital accounting wizard?

By the time you read this we will have had the busiest ten days of the tax year. The final ten days of filing of tax returns, leading up to the final point 11.59pm on 31 January. In total, HMRC calculates 11,564,363 self-assessment returns are due. We still have the age-old problem of the HMRC’s computer experiencing systems errors and plain old glitches, spewing out incorrect penalties and wiping some tax payments due. Some people have genuinely already received premature penalties! I notice this never happens with tax rebates!

You will however also start seeing shortly, (just after Brexit) the Government marketing machine rolling out Making Tax Digital – the super digitisation of the tax system. As I sit here late at night still coping with the last-minute panic of some of my clients, it is hard to fathom quite how this whole thing will work. It is a little-known fact that there are still some tax returns which are not actually automated (such as trust tax), and that not all tax returns are even machine read. Some are still re-keyed in by real life humans.

How then does the HMRC think that the average self-assessment filer is going to become super digitised? I wonder how many of you out there are using software to do your books and how many are still putting it in a bag and dropping it off. I don’t mind either, but it seems our Inland revenue does.

Let’s then take a look at how well HMRC are dealing with their own digitisation. An accountant last year who incorrectly received a penalty for late filing, decided to issue a “Freedom of Information” request. He discovered that HMRC cancelled over 1.2 million late filing notices over the three years to 2016. Unfortunately, it didn’t show which of these penalties were cancelled due to a successful appeal, and which were issued by mistake. Still, 1.2 million is a pretty large number! On a lighter note I also see that the HMRC have issued a list of excuses for late tax returns. (I believe all of these to be true….) The top one on the HMRC’s list and the best so far, is and always will be “my mother-in-law is a witch and put a curse on me”. This is followed closely by “my wife has been seeing aliens and won’t let me enter the house”. You may believe that there are fairly strict rules for appealing a late penalty and here are the ones that didn’t pass muster: Some pedestrian, some supernatural; The Weird:

  • I couldn’t complete my return because my wife left me for my accountant. 

  • A wasp in my car caused me to have an accident and my return which was inside was destroyed.

  • I was too short for the post box.

  • My boiler had broken, and my fingers were too cold to type.

  • My tax return was on my yacht, which caught fire.

And The Sad:

  • Our junior member of staff registered our client in self-assessment by mistake because they were not wearing their glasses.

  • The postman doesn’t deliver to my house.

  • My internet connection failed.

  • My husband told me the deadline was 31 March.

The HMRC publishes this list every January to raise awareness of the January 31 self-assessment deadline. Penalties for late tax returns start at an initial £100 fixed penalty and after three months increases to £10 per day, up to a maximum of £900. As I said all of the excuses listed above were really given and were then deemed untrue or not good enough, but those that are able to provide a reasonable excuse before the deadline can avoid a penalty. Something to think about for next year. 

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