The recent case of Steeden v. Carver (Sp C 212) concerned a self assessment tax return handed in at the tax office mid-morning on Monday 2nd February.
The law requires the return to be delivered to the tax office no later than midnight at the end of 31 January. But the £100 fixed filing penalty is not charged where a return is filed late and the taxpayer had a “reasonable excuse” throughout the “period of default” defined in Section 93(10). That period starts at the beginning of 31 January and ends at midnight on the day before the day on which the return is actually filed. The Inland Revenue view of when the period starts is contrary to the comment of the Special Commissioner in Steeden to the effect that the period of default begins at midnight at the end of 31 January . His decision does not however turn on that point and they consider the detailed statutory definition of the period of default is in line with their view.
Their approach reflects the fact that, where a return is put in the tax office post box overnight, there are practical difficulties in telling whether it was delivered before or after midnight.
For returns required to be filed by 31 January 2000 they take the view that:
a return delivered by midnight at the end of 31 January is clearly on time and there is no question of a late filing penalty,
a return found in the tax office post box before 7:30 am on Tuesday 1 February will be treated as put there before midnight and, hence, as filed on time;
a return delivered by hand or in the post later on that day is late and the “period of default” is the whole of 31 January. But, following the Steeden decision, they will accept that the taxpayer had a reasonable excuse throughout that period, and no penalty will be charged;
a return found in the tax office post box before 7:30 am on Wednesday 2 February will be treated as put in the box before midnight on 1 February; this means that it was filed late and the period of default is the whole of 31 January, but we will accept that the taxpayer had a reasonable excuse throughout that period and no penalty will be charged;
a return found in the post box subsequently (or handed in at any time during or after 2 February) is late and attracts a penalty except where on the particular facts of the case the taxpayer can show he or she had a reasonable excuse throughout the period of default.
Advisers should consider the implications for the next deadline filing date which is Monday 31 January 2000. Both Monday 31 January and Tuesday 1 February are normal working days. Inland Revenue offices are usually open during the core working hours of 10 a.m. to 4 p.m. Many of the larger offices eg. in large city office blocks, and some of the smaller offices do not have a post box for security reasons. Advisers or taxpayers who hand in their returns on 31 January 2000 could always ask the counter clerk for a proof of receipt eg. a compliment slip briefly listing the documents handed in, duly stamped with an official tax office date stamp.