Insights

The Government has been very supportive to businesses who are affected by COVID-19 and it is likely that HMRC will take a more relaxed approach with ordinarily compliant businesses who are facing difficulties as a result of Coronavirus. Resources within HMRC will however be over-stretched and meanwhile, many businesses and individuals  are facing tax compliance problems including missed or late filing of returns and issues with paying HMRC liabilities when due.

It is useful to have a basic understanding of how to deal with HMRC when navigating the ramifications of COVID-19. This article provides a useful overview.

Should you tell HMRC about business problems?

It is always best to communicate with HMRC in advance if your business is anticipating a problem meeting a deadline. This could be a payment which can't be met, a return that is going to be late or you require further to time to deal with an existing enquiry.

HMRC's resources are likely to be overstretched now and it might not be possible to speak to someone, so document any instances when you have tried to make contact and consider writing a letter to outline the issue. The more you communicate with HMRC in whatever form, the more understanding they are likely to be when you do get their attention.

In the case of deferring VAT and self-assessment payments, no action needs to be taken but returns must be filed as normal.

How to contact HMRC

If you have received a penalty, assessment or notice from HMRC, the first thing you should do, if you consider it is incorrect, is ensure that this is appealed against within the time limit. The deadline is often 30 days but the guidance accompanying the communication should make this clear. Try not to panic – penalties are often automated, but we anticipate HMRC will be more sympathetic to taxpayer defaults in this climate.

How do I appeal?

An appeal should be made in writing stating what you are appealing against and why. It does not need to be detailed and can be a very short letter. Do include relevant reference numbers (e g. your unique tax reference number) the date of the appeal and full details of the original HMRC decision/letter. Sometimes an appeal form will be included, and you simply need to complete this.

On what basis can I appeal?

There can be a variety of reasons why a taxpayer might disagree with an HMRC decision – for example they don’t agree with the underlying technical treatment. However, in the context of COVID-19, we anticipate the most typical reason for appeal will be ‘reasonable excuse’.

What does ‘reasonable excuse’ mean?

Reasonable excuse is a term provided in most penalty provisions and broadly means that, considering the circumstances, a taxpayer is not at fault for the failure resulting in a penalty.

We would expect a global pandemic with the associated government measures to fall squarely within this category. However this will only be the case if it relates to a current delay, and not to a delay that dates back to a period before the pandemic. Ordinarily, being unable to meet your HMRC debt is not a reasonable excuse but given the circumstances leading to the current economic situation, we are in very different times.

I’ve missed the deadline to appeal – what should I do?

HMRC is able to accept late appeals. Simply follow the above steps and indicate you wish to make a late appeal, which is at the discretion of HMRC to accept or otherwise; it is important to provide detail as to why you missed the original deadline.

What if I still don’t agree with HMRC’s decision?

If you have appealed and HMRC doesn’t agree, in many instances you can request an internal review. This will mean that a separate part of HMRC (outside the existing team) will review the case file and decide whether it agrees with the current outcome.

If you would like support dealing with HMRC please contact partners@rjp.co.uk.