Friday "musing" - When is a deadline not a deadline :-)
On the 12th May HMRC reminded us all that:-
Your 2008-09 Employer Annual Return is due on 19 May. Send it as soon as possible to avoid the late filing penalty.
On the 20th May HMRC advised what to do if you had not filed ontime:-
The 19 May deadline for sending your 2008-09 EmployerAnnual Return (P14s and P35) has now passed. If you still haven’t filedyour return, you must do so as soon as possible to avoid being chargeda late-filing penalty.
If you have fewer than 50 employees you will still be entitled to a£75 tax-free payment if you file your return online, even though thedeadline has now passed. If you have 50 or more employees, filingonline is compulsory.
You will be charged a penalty if HM Revenue & Customs (HMRC) hasn’t received and accepted your full return by:
- 23.59 on Tuesday 26 May if you file online
- when post is opened on Wednesday 27 May if you file by paper.
Yes , it's great that you do not get a penalty if you file 7 daysafter the deadline, but it would also be useful if a deadline reallywas a deadline and that it was clear from the beginning what thedeadline is.
This year an approval from a client arrived on 19th May at 23.50,and the P35 was filed for them before the May 19th deadline of 23.59. The HMRC online filing system worked well this year.
Some approvals also arrived on the 20th, and those lucky clients will not reveice a penalty due to the wonderful Extra Statutory Concession B46 which means that a deadline is a deadline and 7 days grace.
Some approvals are still outstanding, and those clients will begetting a penalty if we do not receive an approval from them beforeTuesday 26th May at Midday.
So why do we operate the approvals process ? At BFCA Limited wouldfind it much easier if we managed a clients payroll and the filed itwithout reference to our client, we could file away to our heart'scontent and not need to wait for a client to approve the filing.
The process would not need us asking a client to approve a form thatthey do not necessarily understand, and cannot necessarily calculate ifour systems have made the appropraite calculations.
But actually the approval process is vital, and we welcome it !
At the end of the day, whether the client understands the forms ornot, the responsibility is on the client to ensure the form is correct,and so we must ask for approval first. The client is in a positionwhere they have to trust that we know what we are doing and have gotthe form right, and if anything needs explaining then we can explain it.
It is our clients company, our clients tax burden and our clientscompliance record, we are the advisers and accountants and have aresponsibility to produce accurate information on which the client hasto base their decision to file or not.
But it is always the clients decision; in our view when a clientappoints an accountant he appoints someone to help, support and advise;whilst he does have to trust that the accountant knows what they aredoing this does not remove the personal responsibility the taxpayerhas to HMRC.
So we always ask Professional Contractors and Freelancers to approvedocuments before we file them, and we do this on every occasion that wefile documents on behalf of a company, we believe this is better forour clients and also for HMRC compliance.
Some clients think we are being difficult or just trying to shoulderour responsibility on them. Not true, we recognise what ourresponsibility is, but we have to ask clients to recognise theirs.
All this does actually have an important tax consideration in todays regulatory environment.
Firstly "reasonable care" is the new buzzword. Basically if a clienthas taken "reasonable care" then if something is done wrong ( by theclient or the accountant) then there will be no penalty for filingincorrectly.
HMRC say about reasonable care
A claimant has failed to take reasonable care if they have provided incorrect information and
- they have not taken as much care as an average person would, and
- either there were no circumstances whichlimited their ability to be careful or the circumstances wereinsufficient to excuse the error.
HMRC also say:-
People do make mistakes. We do not expect perfection. Weare simply seeking to establish whether the person has taken the careand attention that could be expected from a reasonable person takingreasonable care in similar circumstances.
In our view at this time, having a client approve the documentationis "reasonable care", having a client trusting an accountant to do thecalculations is "reasonable care".
The other important tax consideration is the Managed Service Company Regulations.With this legislation the nature of the relationship between theAccountant and the client is important. Any Accountant is "notinvolved" with their client if we are "merely providing accountantservices in a professional capacity".
HMRC guidancerefers to "Influence" and "Controls" and in our view if we never askfor an approval for any of the forms we file on our clients behalf, whois really running the company ? Who is in "control" ? As far as we areconcerned our clients run their companies , they are always in control,and it is for this reason that we ask for their approval before we fileanything.
That is compliance today for you, harder work for us, harder workfor our clients, but compliance with HMRC guidelines means more peaceful nights sleep for us all.