The complexities of compliance: tax authority processes and making an appeal

Taxes can be considered an evil necessity. No one likes paying them. However, it is for this reason that HM Revenue & Customs (HMRC) has regimes in place that are backed by penalties for those who, for whatever reason, do not comply with their obligations. Whether the taxpayer is a person or a business, penalties can be imposed for a number of reasons—simply missing a deadline by a day or deliberately seeking to evade tax are classic causes.

UK tax law is complex and is growing. In 1997, tax law stood at 5000 pages, by 2009, it was 11520 pages but by 2016, it had grown to around 21 000 pages. With some 10 million words, it is 12.5 times longer than the Bible and 12 times the complete works of Shakespeare. In comparison, Hong Kong's tax law is 150 000 words and is spread over just 276 pages.

It is no wonder that penalties are handed out like sweets, especially as a penalty system for errors in tax returns and other documents was introduced in April 2009 and widened in April 2010. HMRC issued 1.04 million late filing penalties for returns due for the 2014/15 tax year. There were a further 1 million late filing penalties issued for tax returns due for the 2015/16 tax year. Even worse, it appears that in January 2019, a HMRC technical glitch led to some taxpayers receiving inaccurate payment reminders, which led to the wrong amounts of tax being paid and resulted in fines.