“Tax doesn’t have to be taxing” … or does it?

14 January 2015

In advance of the 31 January tax return deadline, HM Revenue and Customs (“HMRC”) have revealed some of the worst excuses used by taxpayers for missing the submission date. The excuses – all of which were used in unsuccessful appeals – were as follows:

  • My pet dog ate my tax return…and all the reminders.
  • I was up a mountain in Wales, and couldn’t find a postbox or get an internet signal.
  • I fell in with the wrong crowd.
  • I’ve been travelling the world, trying to escape from a foreign intelligence agency.
  • Barack Obama is in charge of my finances.
  • I’ve been busy looking after a flock of escaped parrots and some fox cubs.
  • A work colleague borrowed my tax return, to photocopy it, and didn’t give it back.
  • I live in a camper van in a supermarket car park.
  • My girlfriend’s pregnant.
  • I was in Australia.

Although the excuses may be amusing, HMRC were making an important point: namely, that they have a wide (and growing) range of powers to impose penalties on taxpayers for failure to meet a tax liability on time, and that taxpayers face a high burden in demonstrating a “reasonable excuse” not to pay tax when due.

Generally, failure to pay tax on time will result in “failure penalty” and will normally take the form of one-off or daily flat-rate penalties. Failure penalties may not arise if HMRC (or an appeal tribunal) consider that there is a reasonable excuse for the failure. Typically, this will only arise where the delay has been caused by unexpected events beyond the taxpayer’s control.

Complying with HMRC can be particularly complicated for taxpayers with financial affairs in multiple jurisdictions. An individual may be living, for example, in Australia, but still have tax filing obligations in the UK.  The rules on tax residence and domicile are complicated and it is always better to seek legal advice about your tax position before HMRC start an investigation.

Further information

Should you have any questions about any of these issues – and in particular about your tax residence and domicile status – please contact Zoë Sive or a member of the private client team. You may also be interested in reading the following blogs:

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We welcome views and opinions about the issues raised in this blog. Should you require specific advice in relation to personal circumstances, please use the form on the contact page.

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