This is the season of Late Filing Penalties. The £100 penalty is for missing the 31 January deadline for filing the 2018 Self-Assessment Tax Returns and HMRC has announced they have now been issued.

They are automatic penalties, but taxpayers have the right to appeal using “reasonable excuse”.  The HMRC website gives its list of reasons which fit the criterion. We have appealed successfully for a client who was suffering from a blood disorder for example.

A recent tribunal case in the UK illustrates the difficulties in making a successful appeal against late filing penalties. As Robin Williamson reports in TAXline for March 2019:

Mr Pokorowski was a self-employed electrician who was in work until April 2014.  Falling on hard times, he lost his work, his home, his savings and his belongings. He lived on the street until January 2017 when he moved into hostel accommodation. Later on, in 2017 he found work and acquired a permanent home in London.

On 6 April 2015, HMRC sent a notice to file a tax return for 2014/15 to his last known address (from which he had been evicted in 2014).  Between February 2016 and February 2017 HMRC issued a series of late-filing penalty notices, comprising £1,600 in total. These were all sent to the same address.

Mr Pokorowski eventually filed his return on 8 July 2017 on paper. He appealed against the penalties on the grounds that as he was homeless and had lost his belongings and documents, he had a reasonable excuse for late filing, but HMRC resisted. He presented himself before the tribunal.

Judge Aleksander found that Mr Pokorowski had a reasonable excuse for his defaults and had remedied them without unreasonable delay once he was back in permanent accommodation and his excuse ceased.

Judge Aleksander’s conclusion was damning: “HMRC decision to pursue Mr Pokorowski for penalties in the circumstances of this appeal is a scandal. For HMRC to expect a homeless person to keep HMRC up-to-date with their address is ridiculous – and just needs to be stated to show its absurdity.” 

The other example I have found recently comes from the US. Jason Rezaian, half-Iranian from California, decided to grow avocados in the land of his father. He was accused of being a CIA spy. His reward was nearly two years in an Iranian jail. Quite some time after his eventual release, he still suffers some after effects of the trauma made worse by the fact that the IRS insisted he pay penalties for the late filing of his tax returns for the period he spent in jail.

You couldn’t make it up!

His book is Prisoner: My 544 Days in an Iranian Prison by Jason Rezaian published by Harper Collins.