Reasonable excuse but no extension
Many agents were concerned that the severe weather earlier in January might prevent them from helping clients to file on time. Our earlier news items recorded some of these problems and many asked in particular what could be done about penalties for any resulting late filing. This news item has been provided by the Working Together team which is made up of the professional bodies and HMRC.
It is worth noting that HMRC has confirmed our understanding that for individual and trust returns, any late filing penalty will be reduced to nil if all of the money due has been paid by 31 January.
We have heard that there are practices in some parts of the country which have been particularly badly affected such that their workloads have been so severely disrupted that they have not been able to clear the back log before the filing deadline. We have emphasised to HMRC that the improvement in the weather in the latter part of January may not enable all firms to make all returns by the deadline. HMRC has confirmed to us as follows:
Failure to file on time caused by severe weather will be dealt with on the usual basis under the reasonable excuse claim (REC) arrangements.
HMRC has shared its internal guidance on RECs which was updated only this week. This will be available for all to see on the HMRC website when the Self Assessment Manual (SAM) is next updated. With regards to RECs generally, the update reminds HMRC staff who deal with RECs that:
- each case must be considered on its own facts, and
- a reasonable excuse can only exist where an exceptional event beyond the control of the taxpayer prevented completion and return of the tax return by the due date.
With regard to severe weather, the update gives the following examples of how severe weather might create a situation covered by an REC:
‘An extended period of exceptionally severe weather very close to the filing deadline
For example, this may prevent a taxpayer who has taken appropriate steps to ensure their return is completed and submitted by the deadline from giving written authority to their agent to finalise and submit the return on their behalf so the taxpayer no longer has the time or opportunity to make an alternative arrangement. Another example would be where the exceptional conditions prevented an agent’s staff from attending their office to complete and submit the return as authorised by the taxpayer.
You may therefore agree exceptional weather as grounds of reasonable excuse where the circumstances broadly match those described above.’
HMRC states that where agents believe they can show that the severe weather earlier in January prevented a return being filed from then until the deadline, they should make a claim after the return has been filed, and upon receipt of the penalty notice (SA326).
The SA326 will be accompanied by a leaflet (SA355). This sets out how to appeal along with the relevant time limits, and provides a form to use. A letter is also acceptable. The leaflet also advises on the level of detail required, and this is clearly particularly important given that the severe weather has not continued throughout January.
HMRC advises that any claim should be sent to the office shown on the penalty notice.