Despairing at the mess of my tax return penalty

[BlackAndWhiteCat55]

So from 2020-21, I registered myself as self employed as I started doing some private tutoring through a local company. In Feb 2021, this company then went limited and my status with them changed to employed PAYE. I got a letter at the time saying to do a tax return so I rang to update them on my change of status and was told to do the self assessment check online first. I did this and it said I wouldn't need to pay any tax. Stupidly I thought that was it and I didn't have to do anything else.

Roll forward to July this year and I got a letter from hmrc saying that I had a penalty to pay for 2020-21. I tried ringing several times over a few weeks but couldn't get through for ages. I felt so overwhelmed and confused by it that I ignored it. Then I got another letter with a higher penalty. Again, I got so stressed that ignored it for a few weeks. Eventually I made myself actually sort it out, spoke to people at hmrc and did the tax return with help from my lovely dad. It was so confusing online but we did it.

But now I have a £1200 penalty!
Should I appeal? Here's the back story to why I got into such a mess... So I left my part time teaching job in September 2020 and got pregnant with dc2 soon after. I was so so ill during that pregnancy but managed to keep up my private tutoring. It was all during covid too. I have clinical anxiety and ocd which can be quite severe. I had pnd after my dd was born and my anxiety has been really tough this year especially. I'm on meds and still under a psychiatric perinatal support team. My eldest child hasn't been well this year and is also being assessed for adhd. When I got the letters from hmrc, I felt so overwhelmed by it all that I couldn't cope with yet another stress.

I feel so low right now that my inability to cope has led to this mess. I went back into the classroom teaching in April this year part time and I don't even earn £1200 a month. And the really annoying thing is, I earnt such little money in 2020-21 through self employed tutoring, well below the threshold. I didn't get or claim for any maternity allowances as I'd left my previous school then couldn't claim under the tutoring company either as they'd gone limited and I hadn't worked under them for 26 weeks in that status.

Sorry, this is a lengthy mess to read but if anyone has, my question is... now I need to sort out the penalty, would it be unreasonable of me to appeal on the grounds stated above?

To appeal it you need a 'reasonable excuse' and there is guidance online as to what could constitute a reasonable excuse. If I were you I'd have a bash but make sure you read through the guidance first. I work in tax and I appeal penalties all the time, some you win, some you lose but it's always worth a try if you think you have grounds.

@FallopianTubeTrain thank you, I'll certainly try

I got myself in a pickle a few years ago so employed an accountant. She charged a few hundred quid and removed ALL the stress (and fines!) - all in a day’s work for a professional.

Don’t worry. My dh put this off so long he ended up with a 4k fine. He did the outstanding paperwork and they retracted it. Ring them and explain, I think they’re just to scare people

Not only reasonable excuse but that as soon as the reasonable excuse came to an end you fixed the problem.

And what might hamper this is you were still working through out this period. So you were well enough to work but not well enough to sort your tax return (which, unfortunately, when you choose to be self employed is as much a part of your work as the day job).

Worth a try but might be worth getting a professional agent to write the letter as it needs to be factual and in line with RE guidance.

You can try.

I'm aware of someone managing to pay nothing, because they didn't have tax to pay so they reduced the penalty to match.

I also know of people that were told that they have to pay because they didn't appeal within the 30 days.

(I used to work for an accountancy firm)

I would appeal. You don't have anything to lose.

No knowledge or advice but huge sympathy OP. The tax system is very difficult to understand and I feel overwhelmed and reluctant even logging onto the 8700000 step online platform. I've just had to pay £1000+ for a similar mess brought on by a combination of not understanding and burying my head in the sand. One of my not-so-finest hours a few years ago was on the helpline to the poor person trying to explain what I was supposed to do, using lots of words like liability, credit, acrual that mean something to a tax professional but nothing to me, when I burst into tears and yelled "how is anyone supposed to understand this! I believe in paying my tax, I've got a fucking PhD and I don't know what you're talking about!"

Good luck. If it was me, I'd agree a payment plan for the penalty at a rate you can afford and appeal it - then you can stop thinking about it day-day.

Another vote for finding a friendly local accountant to sort out the mess for you. The cost is worth it for the stress relief!

When I went from full time to part time teaching, I assumed that being on PAYE meant that things would continue as normal. Then I suddenly had a letter saying I owed £1800. They were adamant and I still can’t understand it because nothing had changed, other than I worked less, so earned less.

Just call HMRC. I had a hell of a job extricating myself from having to do self assessment, despite all my income being PAYE. I spoke to a lovely woman who wrote off the penalty and rescinded the self assessment.

Thank you. This has really helped me.

If it makes you feel better op our accountant kept saying he registered our ltd company for VAT but didn't then when he finally did he filed our VAT return late resulting in a 14k fine. We have a new accountant now and he is appealing it so hopefully it will go down a bit. But our stupidity for not double checking with hmrc ourselves and trusting the accountant. Even though you should be able to. He was also a family friend which made it worse! Its been a year and still waiting for the appeal result so get cracking OP

Hi what number did you call? I got an automated message saying appeals must be in writing