The Inland Revenue Department (’the Department) has recently issued a number of Form IR 1254 letters advising the recipient that, “According to our information, you have failed to file your tax return by the due date.”
The letter then continues, “If the Department had not detected the failure, tax would have been undercharged.”
The Department then points out that, “The law allows me to impose a penalty (known as “additional tax”) if you do not have a reasonable excuse for the failure. The penalty may be up to 3 times the amount of tax that would have been undercharged.”
The Department has requested written submissions from the delinquent taxpayers but it seems to me as if the Department’s letters are computer generated without any reference to the taxpayer’s file.
In each of the situations that I have looked at there are credible reasons for the delayed filing and certainly none of the taxpayers could be called repeat offenders. I will wait to see the Department’s response to the replies given by these taxpayers but I do not understand why the Department could not have limited sending these letters to repeat offenders only, thereby saving a great deal of time and effort for all concerned.
I was also asked by an SME, who is under all sorts of financial pressure, how the Department’s action could be said to be aligned to the Financial Secretary, Mr John Tsang’s intention of easing the financial burden on our business community over this very difficult period of recession.
I’m afraid I had no answer for him.
