UK business owners must submit their Self Assessment tax return to HMRC by midnight on 31st January or face an automatic penalty of £100 for late filing. But for the million or so people that HMRC estimates fail to file their tax returns in time each year, is there any way of avoiding a fine?
Here Emily Coltman FCA, chief accountant to FreeAgent – who provide cloud accounting software for freelancers, micro-businesses and their accountants – looks at some of the reasons that HMRC will accept for late filing.
Do you have a “reasonable” excuse?
HMRC will only accept what they deem to be “reasonable excuses” as valid reasons for missing the Self Assessment deadline. According to its criteria, this is “when some unforeseeable or unusual event beyond your control has prevented you from filing your return on time”. HMRC highlights potential occasions such as the following as examples:
When there’s a failure in the HMRC computer system that prevents you from filing
When your computer breaks down just before or during the preparation of your online return
When you contract a serious illness, disability or serious mental health condition that makes you incapable of filing your tax return
When you have registered for HMRC Online Services but didn’t get your Activation Code in time to submit your tax return before the deadline.
When important documents are lost through theft, fire, flood or similar circumstances and can’t be replaced before the Self Assessment deadline. In these instances, HMRC will usually judge on a case by case basis and make a decision on whether they are reasonable excuses or not
Anything aside from these reasons is unlikely to be considered – especially if it’s an excuse that is clearly your problem rather than an unforeseen technical, medical or geographical circumstance. So that means you won’t be able to use something like “my dog ate my tax return” or “my wife helps me with my tax return, but she had a headache for ten days” as a valid reason for not filing your return (both of which were genuine excuses that people tried to give to HMRC last year).
You’ll need to prove your circumstances
If you believe that you have a reasonable excuse like the ones above, remember that HMRC will only accept them if they actually prevented you from filing your return on time when you otherwise would have done. HMRC is unlikely to be lenient if it believes that you are at fault for missing the deadline.
It’s therefore advisable to not only show proof of your situation to them, but also demonstrate that you have made some effort to overcome the problems. HMRC will review each case on merit to decide whether it is a “reasonable” excuse or not, so it is up to you to explain your case and put yourself in the best light as possible.
If you aren’t sure whether you have a valid reason for missing the deadline, speak to your accountant and get their advice or contact HMRC directly to explain your circumstances. Just be prepared for the bad news that your excuse isn’t considered reasonable by HMRC, and have £100 ready to pay the fine as soon as possible, so you don’t face any additional penalties down the line.
Remember you still have to file!
Even if HMRC accepts your excuse and allows you to file your tax return late, this isn’t an indefinite reprieve. You’ll still need to file your return as soon as you can, and you’ll also need to pay the tax that you owe too.
Check with HMRC to find out exactly how long your deadline extension is and make sure you submit your tax return by that date, otherwise you’ll start to incur penalties.
Source: Emily Coltman FCA is Chief Accountant to FreeAgent.