Tax Return Fine

[MandarinOrange]

Who is responsible for ensuring tax returns are filed on time ? the taxpayer or the firm of accountants that the taxpayer asks to complete and submit it?

I asked a firm of accountants to complete a tax return for me. Along with the relevant financial information, I sent them a scan of the letter by email, in which I had underlined ?this needs to be submitted within 3 months? and written the date of the deadline. This was roughly 4 weeks before the deadline. I then left the company to get on with it.

About a month after the deadline I received a letter from HMRC asking for a £100 penalty fine for late submission of tax return. I informed the company, who then submitted my return, and paid the penalty.

The company has offered to reduce their bill by £50. I think they should reduce their bill by £100 on the grounds that I handed responsibility to them to get it in on time and a company of accountants should know about HMRC deadlines and penalties and plan their work accordingly. They seem to be implying that I should have reminded them.

What do you think? Should they recompense me for the full £100 or is £50 sufficient? Should I have reminded them of the deadline close to the date?

The taxpayer is responsible for meeting all deadlines and for submitting correct returns.

It is common for people to appoint their accountant as their agent with HMRC; this means they receive copies of notices and reminders and leaves the accountant little room to argue that they weren't aware of the deadline.

It sounds like this is not the case with you, in which case the responsibilities and commitment should be covered in your contract, which is usually called an engagement letter. This letter will state what information you need to provide, what work they are going to do and when it will be completed.

If you haven't got an engagement letter you are in one of two situations:
GOOD: the firm is not following the procedures set out by the professional body of which they are a member or their professional indemnity insurers - both of these always require an engagement letter to be in place for work to be undertaken. Take up your complaint with them and if they do not give you satisfaction complain to the professional body who will not be at all pleased.
BAD: the firm is not a member of a professional body and may not have PII so you may be on your own.

Just a question did you not think that you would have to sign of the return as an accurate record of your finances?

You are. I'm not suprised they didn't do it if you only sent it to them 4 weeks before the deadline. You'd had since 6 April why did you leave it till the last minute?

We don't guarantee to get any returns in where info isn't supplied by 31 July which is 5 months before the deadline (although in reality we do get nearly all done that come in late). I would think yourself lucky that they are offering to go halves on the fine, i wouldn't.

Hello everyone

Thanks a lot for your responses, I really appreciate them. This is not my area so I wanted to gauge usual practise. It looks like I need to pay the additional £50, so I'll go ahead and do that. Let me answer your questions too.

Thanks for referring me to the engagement letter, which I have pulled out. I don't quite understand all the legalese, but I do note a '...you are legally responsible for the preparation and submission...' sentence, which I guess absolves them from any responsibility.

Did you not think that you would have to sign of the return as an accurate record of your finances?
I have not submitted a tax return for several years, so no, it did not trouble me that I didn't receive such a request.

You'd had since 6 April why did you leave it till the last minute?
You are right, I could have been quicker, although there were only 3 months to submit the return from the date on the letter (and it arrived several days later than it was dated). Then not having submitted a tax return for several years I had to find an accountant, sign various forms, find and scan all my the financial information. It wasn't a 'fun' task so I put it off. And then the old excuses like work and children.

The thing that surprises me is that the company didn't show a greater sense of urgency - in calling me back after I contacted them, in chasing me when I didn't send through my financial information, reminding me of the deadline. I would have thought that in the crowded marketplace where many firms are struggling for clients, that companies would want to hold onto existing clients and earn recommendations. I will use a different firm next time, and I won't recommend this one. However if they had said - sorry we messed up, of course we'll pay, we'll change our systems to make sure it doesn't happen again - I would have stuck with them.

But next time - well firstly I need to get a proper handle on my finances so I should really see an IFA and get everything in a better order. Then if I get another tax return request hopefully it'll be easier to dig out all the stuff and send it through quicker. And I will mention the deadline in every email, every telephone conversation.

Thanks for taking the time to respond to me. I don't have any accountant pals so it's been invaluable to benefit from your expertise.