HMRC has updated its guidance on what it will accept as a reasonable excuse for late filing or payment resulting from the coronavirus pandemic. What does the guidance say and how much latitude does it give you?
Appealing against a penalty
HMRC has expanded its guidance on how to appeal against a penalty (see Follow up ) in order to specifically consider coronavirus as a “reasonable excuse”.
When making the appeal you must explain how you were affected by coronavirus, why this led to the late payment or return and demonstrate that you rectified the position as soon as you were able to.
Other excuses
Reasonable. These are the other situations that HMRC considers count as a reasonable excuse: the taxpayer suffering a serious or life-threatening illness; the taxpayer having an unexpected stay in hospital that prevented them from dealing with their tax affairs; the death of a partner or another close relative shortly before the tax return or payment deadline; and postal delays that the taxpayer could not have predicted.
You can see that all of these could be coronavirus related as well, including the postal delay situation if it was impossible to retrieve paperwork from an office during lockdown.
Not reasonable
HMRC also details things that it doesn’t consider an acceptable excuse, even in the current climate: you relied on someone else to send your return and they did not; your cheque bounced or payment failed because you did not have enough money; you found the HMRC online system too difficult to use; you did not get a reminder from HMRC; you made a mistake on your return.
Time to pay arrangements
If you are unable to make your PAYE payments on time, call HMRC and agree a time to pay (TTP) arrangement. The number is 0800 024 1222.
Do bear in mind though that if you have made a claim under the Coronavirus Job Retention Scheme you are not allowed to make a TTP arrangement because HMRC has funded your NI and the tax that is due has been deducted from the employees.
HMRC may cross check that you have not made a claim before agreeing a TTP arrangement and if you have made a claim and not paid on time, it may contact you to ask you to repay the claim.
Deadline for an appeal
HMRC has also announced that it will accept delayed appeals against decisions for penalties dated as far back as February 2020 where the delay is due to the taxpayer, or their business, being affected by coronavirus. There is usually a 30-day deadline to respond to an HMRC enquiry or make an appeal.
HMRC will also allow for appeals to the First-tier Tribunal outside the normal 30-day deadline for such a request if the taxpayer is appealing against any decision dated February 2020 or later and provided the request is made within three months of the normal deadline.
Coronavirus is now considered a reasonable excuse for making a late return or payment as long as you explain how you were affected, and you submit the return or make the payment as soon as possible.
The next step
For the updated guidance.
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