HMRC issued a SA return to my client on 6.4.08. The return was submitted on 3.5.12. HMRC say that this was past the 5.4.12 deadline for filing and therefore they do not intend to process the return. Unfortunate as there is a repayment due. Are HMRC able to do this? What if the return had shown a liability – surely HMRC would have processed the return in those circumstances?
Replies (8)
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Section 8 TMA 1970 requires that the return is dealt with by HMRC. However if a refund of income tax arises from say a Group or personal pension plan payment, then the time limit for the claim for that relief has expired. The deadline under section 192 FA 2004, and section 43 TMA, is 4 years. This is thus 5th April 2012.
The time limit for EIS relief is after the fifth anniversary of the year of issue s.202.
The gift aid claim time limit is similarly 4 years after the tax year, under section 43 TMA.
Capital allowances plant / machinery claims have a 4-year deadline.
Personal business income tax loss relief claim deadlines are sharper. They must be made within the year following the January deadline filing date. Thus if the personal tax refund arises for any of these common reasons, HMRC will not now repay the tax.
Someone will probably tell me H.M.G. have changed one or more of these dates, but I think this is correct.
Late return Filing
The only remedy may be to request the 'special relief' that replaced equitable liabilty. This depends on whether the decision by HMRC not to repay would be 'unconscionable' . Ultimately, the First Tier Tribunal would have to decide this, if the figures make it worthwhile going that far.
Liability
If the return had shown a liability then HMRC could decide to use its powers under the discovery provisions to assess the income.
As the return to which you refer showed a repayment any late filing penalties should be reduced to nil even though the return cannot be processed.
HMRC are correct.
I am not sure that I really agree with any of the other answers.
The issue here is the assessing time limit, a return includes a self-assessment, which is itself an assessment.
Consequently there is a time limit of 4 years from the end of the year of assessment in which the self-assessment can be made. After that it is too late.
If HMRC become aware of an unassessed liability they can assess if they see fit and if they can meet the other tests.
As there are no amounts assessed my view is that HMRC do not need to reduce the late filing penalties in any event.
You can only claim the special relief if there is a determination in place which exceeds the tax liability agreed, and again my view is that it can only reduce the determination to nil, it will not therefore result in any repayment.
late filing penalties
HMRC as a matter of standard practice and I am sure in line with the law (why do it otherwise?) reduce late filing penalties to nil if the return shows nil liability, even though they do not process the return.
They also in my experience use discovery powers to assess amounts shown on the return.
If HMRC agree your special relief claim they will reduce any determinations to nil, they still won't process the return as it is out of date.
If you are very late filing
The practicalities of the matter will soon be changed by the 2011 penalty rules, where you submit very late.
So for a 2011 SA return, the £10.00 current daily penalties will soon make the overall situation very unpalatable.
I do not agree that you cannot self-assess after a 4-year period. Thus for instance, there is nothing to stop you now sending in a 2009 return during the calendar year 2014 [for instance if you had a salary PAYE code of perhaps D0], but you will suffer the surcharges, and payment penalties, on any income tax / CGT liability. You do then run the risk that any claims for pension, gift aid etc. or for the AIA for plant may be rejected as being out of time.
Much better to file now, and show some estimates!