This week's opinion: 28 February 2019

Those of us dealing mainly with personal tax have had little reason to think about the impact of Brexit on our clients, but an announcement in Agent Update 70 shows how much it is starting to affect the everyday operation of the tax system. HMRC announced that late filing penalty notices, which normally go out in February, will be delayed, potentially until the end of April. This is because the notices always generate large numbers of enquiries to HMRC’s call centres, but it is expected that there will be many Brexit-related calls to those centres in March. So that call centre staff are not diverted from urgent Brexit questions by taking calls about late filing penalties, their issue will be held back until after the immediate post-Brexit period. HMRC does say that if the withdrawal agreement is signed the penalty notices will go out earlier.

It is hard not to have sympathy for HMRC. It is under enormous pressure to keep the lights on if there is a hard Brexit and perhaps there was no other approach it could have taken. But the point of the penalty system is that it is designed to encourage particular behaviours. The receipt of a £100 notice is meant to be a reminder to file and thus avoid higher penalties. That is much less likely to be effective if the notice comes out very close to the day when the higher penalties start to kick in. Of course, people should file on time and most who have not filed will know they haven’t done so. But things sometime go wrong. Let’s hope that common sense prevails, and we do not have a whole rash of cases next year as a result of HMRC’s decision.

If you do one thing…

Are you clear about the distinction between reasonable excuse and special circumstances? In my experience, people look at the two as a single test. For a clear explanation look at paras 14 to 18 in Jones (TC6991) (tinyurl.com/tc6991).

Andrew Hubbard