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HMRC Determination Notice

HMRC Determination Notice

I have recently taken on a new Client whose previous accountants for some reason failed to file a tax return for the 2007 tax year, despite filing the years before and after!  As a result of the failure the Client received a Determination from HMRC in the sum of £900.00 which has never been paid. He also received late filing penalties and interest continues to accrue on the outstanding balance. 

Unfortunately, the Client did not seek my assistance until December 2011 and therefore, although I have filed the 2007 return on his behalf, HMRC have confirmed that the time limit for the 2007 self assessment expired on 5th April 2011 and thus the determination stands.  The Penalties have now been reduced to nil due to the return now having been filed but interest continues to accrue on the determination amount. 

I believe the Client may have an action against his previous accountants and have contacted them in this respect.  In the meantime, HMRC have sent the debt to a debt collection service and the Client simply doesn't have the funds to pay.  My concern is how HMRC have reached the figure of £900.00 for the tax due to 5th April 2007.  In previous years the Client was always entitled to a refund of tax due to pension income being taxed at source and the Client having no other income on which tax was due (he ran a business as a sole trader until 2006/7 which had accumulated losses of approx £30,000).  I have spoken with HMRC regarding the determination and they have advised that there are no guidelines on how to calculate the determination amount and it is simply up to the relevant advisor dealing with the matter to decide!  I have also been advised that there can be no appeal now due to the length of time since the determination was made. 

Is the Client's only course of action to pursue his previous accountants?

Many thanks


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05th Mar 2012 14:25

What is the correct figure for 2007

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to JKnight
05th Mar 2012 15:21

The correct figure for 2007 was a refund of £177.00!!

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05th Mar 2012 15:12

Late Appeal

There was a concession known as "Equitable Liability" by which HMRC would recognise that had the return been submitted at the appropriate time the liability would have been less and effectively amend the liability to "actuals".

The Government are in the process of legislating for all ESCs and it appears that efforts by HMRC to abolish equitable liability were unsuccessful and it still remains.


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05th Mar 2012 15:47

As indicated by Thomas above you can try for Equitable Liability relief.


You have to look at the fee cost problem. If the client cannot pay the £900 can they pay you to attempt to get Equitable Liabilty established? This does not cancel the determination, which is final and conclusive in law but "In certain circumstances HMRC is prepared to consider whether it can exceptionally accept a lesser sum in settlement of what is legally due" This quote came from a letter finalising a recent successful application for EL

Yes by all means let the client persue the previous accountant, who should pay up such a small sum directly without involving his Indemnity insurers failing which the Small Claims Court should concentrate his mind for a small cost

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By halesir
07th Mar 2012 12:29

Equitable Liability

I am surprised that no-one has pointed out that EL no longer exists. It was replaced on 1/4/11 by Special Relief. See Revenue and Customs Brief 17/11

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