In a radio report on Monday 25 July, HM Revenue & Customs admitted that they had failed to send out approximately £500,000 reminders for tax payments due on 31 July. One of the stated reasons was that they had failed to order sufficient paper although one spokesman did say that it was; “more complicated than that”. Whatever the reason, it highlights again the ineffectiveness of HMRC in carrying out what would seem to be a fairly straightforward task.
However, it does not stop there. They announced that those who had failed to receive these demands – principally taxpayers paying by instalment – would be given an extra month to settle their liabilities. It is unclear what is meant by that. The self-assessment system for income tax places an obligation on taxpayers to file a Tax Return and to pay their taxes on the due dates. For those who only receive income under PAYE, or who are basic-rate taxpayers, there may be no need for a Return. But for anyone else, a Return is likely and any tax owing in respect of a tax year ended 5 April, would be due for payment by the following 31 January. Such taxpayers also, in some circumstances, have to make payments on account of the following year’s liability and these payments are due in two equal instalments on 31 January and 31 July each year. It is that 31 July liability to which the latest debacle applies.
It is true that some taxpayers have made arrangements to pay their tax by instalments because of financial difficulties and for a while HMRC were very amenable to helping out. However, the latest announcement gives an unfair advantage to people who have not received reminders. Reminders are not strictly needed because under the self-assessment system the onus is on the taxpayer to pay his or her liabilities when they fall due. This is regardless of whether they have received a reminder. So once again we have an inequality in that those who are conscientious and pay their tax when it is due will suffer compared to those who get an extra month’s credit.
Then again, why did I ever think that the tax system was meant to be fair!