BEN WILKINSON: HMRC must learn when to show a little leniency

A taxing time for all: HMRC must learn when it’s time to show a little leniency, says BEN WILKINSON

Deadlines are useful tools. Without them, a lot of us wouldn’t get things done.

And the self-assessment online deadline is no different. You get organised and file your return, or you receive your comeuppance in the post in the form of a £100 fine.

We all know, deep down, that tax bills are unavoidable and will have to be paid sooner or later. The threat of a fine or interest helps us get this done and move on.

Death and taxes: We all know, deep down, that tax bills are unavoidable and will have to be paid sooner or later. The threat of a fine or interest helps us get this done and move on

This is why more than 700,000 people filed their return on deadline day last year, compared with the 96,519 who did so on the very first day of the tax year.

Let’s be honest, too — we have had more than enough time to file our returns. It is more than nine months since the window first opened. A strict deadline and the threat of a fine are needed to spur us into action.

But perhaps this year is different. Coronavirus has caused untold heartache, loss and upset. Incomes were wiped out last year and have still not yet had a chance to recover. Accountants are also grappling with a raft of new criteria, as well as battling sickness and home-schooling.

But most of us will still be able to find the time to file our return. Indeed, most of us have already. Yet it is troubling to think that those who have lost loved ones or spent time in hospital fighting for their lives could have a £100 penalty land on their doorstep.

The taxman has also shown signs of strain. Call waiting times are considerably longer and HMRC could soon be dealing with millions of penalty appeals.

And yet, while sticking rigidly to the January 31 deadline, HMRC has at the same time made it a lot easier to prolong the inevitable. Taxpayers can now simply fill in an online form to stagger their bill across a year.

For those struggling to pay the bill, this could be a lifeline. But interest is, of course, piled on top, and there is a risk that thousands of people will be tempted to take this option as the easy way out — building up extra debt for another day when, inevitably, more bills will be due.

Non-negotiable deadlines are good for us, but it doesn’t sit well that Covid victims could be fined this year while others are offered the chance to get into debt.

Should the stamp duty holiday deadline also be set in stone? Unlike tax returns, home purchases cannot be completed in a few hours. Those who have done all they can to meet the deadline should be shown leniency to stop sales and chains falling apart.

Insurance indignity

It was a humbling day for insurers last week as the Supreme Court ordered them to pay out hundreds of millions of pounds to struggling businesses.

These firms had bought policies to protect them against disruption and losses — but when the pandemic arrived and they needed to claim to stay afloat, the door was shut firmly in their faces.

Now, after an arduous and no doubt staggeringly expensive legal fight, the insurers have been ordered to pay up. Let’s hope they don’t dilly-dally any longer and save these businesses from collapse. Insurers would do well to remember that ordinary people are trying to do the right thing when they buy their products.

Insurance is often expensive but that is the price of security. So when insurers try to wriggle out of paying, using vague small print, it never looks good. It’s nice to see justice has been done.

Health and wealth

A major scientific study this week confirms what many people have always suspected: that you keep getting happier as you get more and more money. 

Yes, it would be wonderful to have no money worries but for most of us that will never be the case.

I like to think better money management will help you to be happier with whatever you have.

Budgeting and saving are necessary evils. We’d love to hear your financial philosophies. Contact us at [email protected].