15/16 Failure to Notify

New client with large increase in investment income for 15/16 has not notified HMRC

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For the first time in many years I seem to have a failure to notify case. A new client has popped up who receives pension (state and former employer's) totalling around £52,000 plus a small amount of bank interest and dividend income, under £3,000 each year. This has been dealt with fairly successfully via PAYE since 2010 with no SA returns requested or submitted since 2009/10. I have reviewed the in-date years 12/13 to 15/16. 12/13 to 14/15 show small errors in tax collected of under £200 each year with a net amount due to HMRC of £35.  For 15/16 however, an unexpected dividend of £12,000 was received producing a much larger underpayment.

Client has received Personal Tax Statements each year for 13/14 and 14/15 which 'look accurate' to him and he assumed HMRC were therefore up to speed with his income, clearly we know better!

My question is now whether to simply submit an online 15/16 tax return (the SA record is still live and I have added the client to my online list), and see what happens, whilst advising the client that the FTN penalty (based on tax lost) is likely to be more than the £100 late submission penalty he expects. Or might HMRC simply issue the £100 fine?  I am happy to communicate with HMRC regarding the FTN penalty mitigation, hoping to reduce to maybe 10 - 20% with full unprompted disclosure?

Does anyone have any experience of this situation and know which penalty is more likely to be levied. And yes, I know which one SHOULD be applied, just wondering what happens in reality.

Thanks for any information you can provide. Will not make a huge difference financially, client accepts penalty due, just want to advise him of the likely process.

Replies (3)

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By Tim Vane
21st Feb 2017 10:29

Submit the return and pay the outstanding tax plus interest. If you are lucky it's perfectly possible that HMRC will accept the status quo and he'll not get any penalties at all.

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By SteveRA
21st Feb 2017 11:29

that thought had occurred to me too, let's hope he gets lucky!

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By SteveHa
21st Feb 2017 12:13

There won't be a late submission penalty if he hasn't been issued with a notice to file, and as Tim says, there's every chance that HMRC won't notice the FTN.

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