A reasonable excuse for late share plan returns?

Posted by Jennifer at 11:40 on 13 Feb 2017

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At a recent share plans event, we were surprised to learn just how many companies fail to submit their annual share plans returns.

Penalties for late filing

Failure to submit a share plan return – as for any other late tax return – will result in penalties. However, unlike your personal tax return, HMRC do not send you kind reminders about the deadline – it’s up to the company to remember to get those returns in on time.

The deadline to complete share plans returns is 6 July each year. If you don’t file your return by then, expect an automatic penalty of £100 for each return that is filed late. Returns later than three months will cost an additional £300; and if the return is later than nine months, the penalty is a further £300. If you have more than one share plan operating in your company, the penalties will apply to each share plan return that you fail to file.

What is a reasonable excuse?

Also, like other tax returns, HMRC will accept appeals if you have a reasonable excuse to meet the deadline. HMRC sets out examples of reasonable excuses on their website here: https://www.gov.uk/tax-appeals/reasonable-excuses.

However, there are plenty of examples of taxpayers who have tried – and failed – to argue that they had a reasonable excuse to file tax returns. For example, it has been held that long-term mental illness (schizophrenia), while a reasonable excuse for a person not to be able to deal with their tax affairs properly, was not an excuse for a person not to complete filing of their returns at all, or to pay their tax (Appellant v Revenue and Customs Commissioners[2017] UKFTT 0839 (TC)); significant and extremely stressful care responsibilities for close family members over a period of time was similarly not an excuse (ASM (Refurbishments & Decorators) Ltd v The Commissioners for Her Majesty's Revenue & Customs [2016] UKFTT 0822 (TC)); and relying on a third party who then fails to submit the return on your behalf, however reliable they may have been in the past, is unlikely to cut much ice with the Tribunal (Chartridge Developments Limited v The Commissioners for Her Majesty's Revenue & Customs [2016] UKFTT 0766 (TC)).

If you are concerned about your share plan returns, contact a member of our Operations Team at operations@rm2.co.uk or call 020 8949 5522. The team will be able to help you avoid penalties for late or incorrect filing.