How do you feel about paying for a complete stranger’s birthday night out? What about their rabbit’s vet bill? We don’t really fancy that idea either, but they are just two of the most ridiculous expenses that people have tried to claim for on their 2016-17 tax returns.
Rejected expenses
HMRC do deliberate over each tax return and sometimes have to reject expenses because they don’t fully meet all the necessary criteria. But some people’s definition of a work expense falls into the outrageous category. For example:
- Hotel room extras of Prosecco and candles
- Daily plate of sausage and chips at £4.50, for 250 days of the year
- A three-piece suite for my partner to sit on when I’m doing my accounts.
As well as the previously mentioned birthday drinks at a Glasgow nightclub and the vet’s bill for a rabbit. Needless to say, all of these claims were rejected by HMRC.
Most of us wouldn’t dream of including any of these and, at first glance, it is hilarious that anyone actually types this sort of thing into their self assessment tax return form. But there is also an underlying niggle. Claiming back legitimate tax relief on real work expenses is one thing; trying to wangle a false claim is quite another. After all, HMRC is a government department that is tasked with administering our money. They’re not defrauding some ‘other’, but other taxpayers just like you and me.
Why was your tax return late?
HMRC also have a list of the most unbelievable reasons that taxpayers gave for late filing of their tax return. Some of our favourites are:
- ‘My business doesn’t really do anything.’
- ‘I spilt coffee on it.’
- ‘I’ve been far too busy touring the country with my one-man play.’
- ‘My ex-wife left my tax return upstairs, but I suffer from vertigo and can’t go upstairs to retrieve it.’
All rather flimsy, at best. But this year’s winner for most imaginative excuse goes to: ‘I couldn’t file my return on time as my wife has been seeing aliens and won’t let me enter the house.’ There’s just so much to unpack there. Luckily all HMRC were obliged to do was turn it down and issue their fine accordingly.
What do HMRC say?
HMRC release a list of late excuses and expenses that have been rejected every year. There are always a few entertaining ones that make for amusing reading. The serious side of the matter is explained by HMRC’s Director General of Customer Services, Angela MacDonald;
“Each year we’re making it easier and more intuitive for our customers to complete their tax return, but each year we still come across some questionable excuses, whether that’s blaming a busy touring schedule or seeing aliens. However, help will always be provided for those who have a genuine excuse for not submitting their return on time.
We also receive absurd expense claims from vet fees for a rabbit to room service at a hotel. It is unfair to make honest taxpayers pick up the bill for other people’s spurious claims, so HMRC will only accept sincere claims such as legitimate expenses for a job.”
When is the next Self assessment tax return deadline?
For the 2016-17 tax year, your deadline for filing was 31st January 2018. You must get your 2017-18 filed by midnight 31st January 2019, preferably without any tenuous or creative expenses.
HMRC are taking a tougher line with taxpayers who repeatedly file their returns late and those who deliberately try to evade paying tax. Recently, this has meant a softening in their approach to those with genuine reasons for missing the deadline. Automatic late penalties are now waived for those with a real reason and evidence to support it.
For example, if you know that you are going to miss the deadline, phone HMRC beforehand so they have the opportunity to help you. There is a dedicated Self Assessment helpline, 0300 200 3310. They also have online information that explains the whole process from registration to filing your tax return.
Are the late fines expensive?
There is an automatic £100 fixed penalty for missing the deadline. You have to pay this, even if you are declaring that you have no tax to pay. The longer you leave it, the more fines you rack up. It starts at £10 per day for three months after the deadline, to a maximum of £900. After six months, this becomes an additional £300 or 5% of your tax bill (whichever is the bigger amount). Another £300 or 5% is then added after 12 months. Whether you consider that expensive or not, it is certainly an incredible waste of your hard earned money, just for the sake of completing a form on time.
What have we learned?
Every year this list from HMRC teaches us two things:
- HMRC really do read all of the tax returns.
- Some people are unbelievable. Whether they genuinely don’t understand the rules, are blatantly lying or just chancing their arm, it is truly unbelievable that such stories are submitted on official paperwork.
Getting your self assessment tax return in on time avoids all the fines and associated hassle. Even the most entertaining excuses get rejected if they aren’t real work expenses or acceptable reasons for missing the deadline. So only put legitimate work expenses on your tax return.
Tony Shanks