Is the fine and penalty regime actually working?
It seems that hardly a week goes by that we don’t get an email in our inbox talking about fines and penalties being levied for some infringement or other. We know that according to HMRC on 31st January 2018, 745,500 Tax Returns were filed late and now we know that this January, 731,186 were filed late which shows a negligible reduction in numbers and an annual £74m approx. bonus as it were to the coffers. Now we find that Companies House has announced that for 2017/18 over 204,000 late filing were issued by them which brought in revenue of £87m.
Now we never get accurate or in fact any information of how much was actually collected against the possible total nor how many of the late filings were overruled bearing in mind that this year some taxpayers were in receipt of late filing notification even before the deadline had been reached.
It shows that as a supposed inducement to file on time or a disincentive to file late penalties are not working that well and yet there seems to be no let up in the yearly grind.
If a monetary fine is deemed to be an adequate incentive to comply with the obligation to file on time and thus fulfil your responsibilities by our government departments, why is it that no one has considered the possibility of incentivising HMRC to fulfil their obligations.
There could be fines for issuing late filing penalties, for failing to allocate and account for all payments actually paid, for sending out demands for money that is not due. The list could go on and on and of course you may say I’m being facetious and late filings are different but if the powers that be feel a monetary penalty is a genuine tool to discourage bad habits or by default to encourage compliance could they not work in reverse? Could we have a leaner fitter more efficient HMRC if the department had to pay taxpayers when they failed to fulfil their obligations £millions? Would management be more effective if they knew not only how many times their team had failed but it cost them a hit on their budget? Would we be happy to actually award honours when we knew a good job was definitely being done?
Will it ever happen? Of course not, but should it happen? See how you feel if you or your client gets a late filing penalty that is not due and you have to get it sorted.