Small businesses advised to challenge penalties sent out too late.

Independent retailers should be on the lookout for incorrect fines levied by HM Revenues & Customs in relation to late submissions of end-of-year tax returns, according to Northwest accountants Mitchell Charlesworth.

The firm is claiming that HM Revenue & Customs issued a slew of incorrect fines last month and has recently worked with one company, computer services business Hok, to reduce the charged levied against it.


Hok had failed to submit its P35 in time but HM Revenue & Customs failed to notify it until four months after the error was made but charged the company for every month it had not paid. The charge was successfully reduced from £400 to £100.

Mitchell Charlesworth is advising any company that is concerned about fines related to the late filing of Employers Annual Return forms to contact a payroll specialist immediately.

Mitchell Charlesworth payroll manager Joanne Niemann said: “The fine structure has seen businesses being charged per month after missing the tax return deadline. But critically many of these firms weren’t informed until several months down the line. It is a ludicrous scenario because many businesses would have remedied the situation much earlier had they been made aware.”

The company said that it has acted on behalf of many companies that have faced these fines. Niemann added: “Many firms have taken the matter to tribunals and have been successful in getting these fines waived through formal appeals. Many new cases came to light in recent weeks when the HMR&C issued penalty notices for late P35s. This led accountants and lawyers to warn company owners to check their post.”

Nieman said HM Revenue & Customs had originally designed the timetable for issuing penalties to allow a reasonable period for employers to give notice if they have no return to make, but by issuing notices months after deadlines it proves unfair to small businesses.

She added: “There are real problems with this penalty notice system. A number of first tier tax tribunal judges have criticised HMR&C for not issuing penalties earlier. We would advise anyone who feels a fine issued against them is unfair or excessive to seek help and challenge the appeal.”

A further HM Revenue & Customs computing issue has seen a number of Mitchell Charlesworth clients receiving penalties for non-submission of P35 forms – despite logging nil returns with the HM Revenue & Customs website. The firm said that even though submission receipts were emailed to firms, nil return submissions had not been recorded.

Nieman said that a recent investigation at HM Revenue & Customs revealed a problem in dealing with P35 no return to make notifications. This has resulted in some penalty notices being issued in error.