HM Revenue & Customs (HMRC) has addressed an IT issue that mistakenly applied penalties to some taxpayers’ VAT accounts, despite their returns being submitted on time. The problem, which affected VAT returns submitted on 7 December 2024, has drawn criticism from tax experts and sparked concern among businesses.
In a statement published on its service update page, HMRC explained the nature of the error:
“HMRC are aware of an IT issue that has prevented a number of VAT returns submitted on 7 December 2024 from being accepted on to customers’ VAT accounts. If you’ve been impacted by this issue, your business tax account will show the return as due on and received on 7 December 2024, but with a penalty or penalty points applied. We’re currently taking action to correct the issue and complete these returns in the system.”
Criticism of HMRC’s Communication Failures Amid Tax Error
Tax expert Dan Neidle was among those to highlight the mishap on social media platform X (formerly Twitter). He criticised HMRC’s handling of the situation, particularly the lack of proactive communication with affected taxpayers.
Neidle warned that many taxpayers might remain unaware of the error due to the absence of direct notification from HMRC. He called for improved communication and swift resolution:
HMRC Apologizes and Promises Swift Correction of VAT Return Issues
In response to the backlash, an HMRC spokesperson issued an apology and assured taxpayers that corrective action was underway.
We’re sorry that a small number of VAT returns submitted on 7 December were not accepted on some customers’ accounts. We’re working swiftly to correct them. Any penalties or penalty points incorrectly applied will be removed, so customers don’t need to take any further action.”
The department confirmed that no immediate action was required from taxpayers, and that any penalties applied in error would be reversed.
Navigating Tax Challenges During the Holiday Season: Best Practices for Businesses
The incident comes as businesses navigate a busy period in the lead-up to Christmas, with many already managing tight cash flow and end-of-year tax obligations. For some, the temporary inaccuracies may have caused unnecessary stress and confusion.
To minimise potential disruptions in similar future incidents, businesses could consider the following steps:
- Regular account monitoring: Check for discrepancies or unusual activity on business tax accounts.
- Keeping accurate records: Retain copies of all submissions, including confirmations of successful VAT return submissions.
- Proactive engagement with HMRC: Contact HMRC promptly if errors arise or if unusual penalties appear.
While the issue is being rectified, these steps can help businesses maintain control over their accounts and ensure timely identification of any anomalies.
