Tax: Severe weather and flooding

Flooding
Donald-Drysdale By Donald Drysdale for ICAS

20 January 2017

In storm-damaged parts of the UK, HMRC are offering a measure of practical tax help and advice, explains Donald Drysdale.

Ongoing wild weather

The weather of 2016 came in like a lion, but certainly didn’t go out like a lamb. Early in the year there had been devastating flooding in many areas – especially in northern England, Scotland and Northern Ireland.

On 20 November 2016 it all started again, with storm Angus bringing strong winds and heavy rain to the south of England, and causing flooding to parts of South West England. Then on 23 and 24 December, storm Barbara brought strong winds across the country, with the main focus of the storm on parts of north and northwest Scotland. Hard on the heels of storm Barbara came storm Conor, bringing wild weather on Christmas Day and Boxing Day, with very strong winds across northern Scotland and the Northern Isles.

Tax help for those affected

If you’re caught in a storm, tax may not always be uppermost in your mind. Nevertheless, if you neglect your tax affairs for even a short time, difficulties may arise – such as penalties for late filing of returns or late payment of tax liabilities.

HMRC have again established a special helpline for anyone affected by the severe weather and flooding. It aims to offer practical help and advice on a wide range of tax problems they may be facing.

The helpline is on 0800 904 7900, and is in addition to other HMRC telephone contact numbers. Opening hours are Monday to Friday, 8:00 am to 8:00 pm, and Saturday and Sunday, 8:00 am to 4:00 pm, excluding bank holidays.

HMRC will be prepared to agree instalment arrangements, and suspend debt collection procedures, where taxpayers are unable to pay as a result of severe weather or flooding. While this sounds helpful, remember that interest on unpaid tax will still be charged in accordance with the normal rules – except where HMRC agree not to charge interest on account of a matter designated as a national disaster or emergency.

HMRC have stated that they will agree a practical approach when individuals or businesses have lost vital records due to flooding. This sounds reassuring, but it remains unclear what such a practical approach might be. Practitioners know only too well how hard it is to negotiate clients’ tax liabilities based on incomplete records, and relationships between agent and client can also become strained in such circumstances.

HMRC have also undertaken to cancel penalties when the taxpayer has missed a statutory deadline, and this may do no more than reinforce the availability of a ‘reasonable excuse’ for a limited time. However, where a claim or election is arbitrarily available at the taxpayer’s option, it would be prudent to lodge it in time or, in cases where this cannot be achieved, to retain convincing evidence that the decision to submit it had been taken and that it was only the severe weather or flooding that accounted for its lateness.

National disasters or emergencies

Following extensive flooding in many areas of England, Wales and Northern Ireland in June and July 2007, Finance Act 2008 gave the Treasury power to issue orders designating particular disasters or emergencies as being of national significance.

Where HMRC agree that tax may be deferred by reason of circumstances arising as a result of an event which has been so designated by Treasury order, no interest or surcharge arises on the sum due while so designated. Unhelpfully, this Treasury power has been used only once – to designate the floods in June and July 2007.

This article updates advice provided in Tax help for flood victims in January 2016.

Article supplied by Taxing Words Ltd

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