Self Assessment tax returns: have HMRC wrongly pursued you for payment?

A freedom of information request has revealed that HMRC cancelled 270,000 late payment penalties in 2016. The question is, how many taxpayers have settled fines that were wrongly issued?

HMRC also gave figures for 2014 and 2015, which show they stopped pursuing 400,000 and 610,000 fines in those years respectively.

Are people paying unlawful fines?

The Financial Times reports that HMRC released the figures after law firm Clifford Chance lodged a freedom of information request.

HMRC says that the majority of these penalties were scrapped because taxpayers gave a “reasonable excuse” for submitting a late return.

But the fact that HMRC is issuing, and subsequently cancelling, so many penalties has prompted lawyers and tax experts to ask how many people are paying unlawful fines.

Dan Neidle, a partner at Clifford Chance (and the person who lodged the freedom of information request), had a £100 penalty overturned after appealing. He was sent a late payment notice, despite submitting his tax return in December.

He says that “something is going wrong” with HMRC’s automated penalty filing system.

What checks and balances do HMRC have?

Mitch Young, a tax and IT advice specialist, claims that a number of his clients received penalty notices despite submitting their returns on time.

He believes this is due to an HMRC system error, or because they’ve issued duplicate unique tax reference numbers. He said that “the issue is that these penalty demands are automatically sent through the system without any checks or balances.”

Extra stress for Self Assessment taxpayers

Completing a tax return can be a painful task, and this flaw in HMRC’s penalty lodging system only adds extra stress to the process for some taxpayers.

If appealing a late payment fine, it’s important to have a reasonable excuse and evidence to back up a claim.

At Simply Business, we aim to help small businesses make Self Assessment as stress-free as possible, so check out our complete guide to Self Assessment tax returns for everything you need to know.

Have you ever been wrongly pursued for payment by HMRC? Let us know in the comments below.

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