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HMRC back down over penalties

HMRC back down over penalties

HMRC has been issuing a large number of incorrect VAT penalties over the last year and a half, according to UHY Hacker Young. In fact over 50% of the penalties that were issued to taxpayers were later overturned on appeal

Official data shows that of the 28,812 late or inaccurate VAT return cases the Revenue has reviewed, 16,270 were imposed incorrectly. A similar pattern emerges when you take into consideration the penalties issued for technical reasons across all taxes. 48% were subsequently found to have been issued wrongly.

Worryingly, many people do not query the penalty, said Simon Newark, a VAT partner at UHY Hacker Young. He also pointed out that whilst businesses try their best to understand complex taxes, if HMRC’s own employees also struggle, it seems highly unjust to make businesses suffer.

In related news, thousands of firms that should have filed their accounts with Companies House by the 31st December are now studying the appeals process.

In the first two weeks of the new year, almost 1,700 appeals were lodged against late filing penalties, including one business owner who says he sent his accounts by first class mail on December 16th. This should normally be more than enough time for mail to reach its destination but the icy weather conditions in December knocked the postal system for six.

Companies House has said the adverse weather was not spread across the entire country and is therefore an exceptional circumstance for a small number of companies.

Late filing fees, starting at £150, are automatically issued once accounts become overdue. Guidance on the Companies House website states that you can appeal the penalty but to be successful you need to prove exceptional circumstances and delays in the post do not normally qualify.

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Image: Lefty Clock by RBerteig

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