We submitted a 2013 SA return for a client in jul 2013. It then came to light that a large dividend had been omitted from the return and it was resubmitted in dec 13 with the correction. Hmrc have now threatened to add a penalty as they consider the omission was deliberate.
Can they add penalties like this when the deadline for submitting the return hasn't passed yet?
Replies (8)
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Did you approach them with the correction?
With it being a dividend, I expect so. I would be surprised and disappointed if HMRC do carry out their threat. Everyone makes mistakes. Just kindly point that out and raise the point that the treasury hasn't lost a bean.
Doesn't matter that no tax has been lost
Penalties are based on potential, not actual, tax lost. Having said that, it would be a harsh Inspector indeed that imposed a penalty. Deliberate omission doesn't square with voluntary correction before the deadline (assuming it was voluntary).
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Penalties are based on potential, not actual, tax lost. Having said that, it would be a harsh Inspector indeed that imposed a penalty. Deliberate omission doesn't square with voluntary correction before the deadline (assuming it was voluntary).
Whilst you are of course correct with reference to the potential lost revenue, the fact that no tax has actually been lost is a moral bargaining chip I wouldn't miss in any correspondence.
Tax Returns
I was under impression tax return could be amended at any time up to filing deadline so no penalty is due.
Amendment and forced change
If it is simply an amendment due to an innocent error, then that is one thing. If it is an omission that has been picked up by HMRC who have then forced a change, that is another. In the latter case, it would be the discovery of an error by HMRC that gave rise to the penalty. Whether HMRC would be justified in applying a penalty when any additional tax wasn't even due yet is a matter for debate. I was under impression tax return could be amended at any time up to filing deadline so no penalty is due.
To answer the headline
Yes - you can receive a penalty for late filing now if the Return has been sent in on paper.
I did the same thing 2 days ago...
...but picked it up yesterday, and submitted an amended return. I included the total in the box for 'personal services company' but simply forgot to add my dividend to the worksheet.
The amount was significant enough to make me question my own return when I looked at the calculation. I would question why your client did not tell you about it for 6 months.