Company wrongly marked as dormant

Company wrongly marked as dormant

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New client has a long period of accounts (16 December 2011 to 31 December 2012).

We filed both periods before 31 December 2013.

It came to light that the first period of accounts has been marked as dormant.  We presume because either the CT41G had the wrong year in it (by director), or an admin assistant at HMRC typed it wrong.  The client has not kept a copy and no-one at HMRC seems capable of finding the original submitted form.  The upshot is that the company only appeared as trading from 15 December 2012.  HMRC have now been corrected that the company was trading from 2011.

We subsequently receive a late filing notice from HMRC for the first period of account (year to 15 December 2012).  We call to discuss this, only to be told that the first CT return would have been rejected because it was marked as dormant and therefore when it was subsequently processed, it was late.

I have not come across this before - legitimate filing penalty or should we battle HMRC?

Replies (7)

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Stepurhan
By stepurhan
18th Feb 2014 17:10

Battle

If a return has been submitted to HMRC, that is notice that the company was trading in the relevant period. To say that it was rejected because the company was marked as dormant is just nonsense. The main purpose of the CT41G is to avoid returns being chased too early (from incorporation rather than trading) but filed returns over-ride any dates on them.

You have proof that you submitted an in-time return to HMRC. It is up to HMRC to provide a valid reason for that return not being accepted when filed. Dormancy is not a valid reason, though I note they only say "would have", so they aren't even offering that as a reason for rejection with any certainty. In fact, given they cannot locate the CT41G, they cannot even prove they had reason to mark the company as dormant in the first place. If you simply point out how farcical that is on its own, it should hopefully be enough for them to back down.

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By tebthereb
18th Feb 2014 17:38

Appeal in writing and I would be surprised if HMRC held that stance. The quality of people on the phone is not good and sadly calling "to discuss" (sensible in the real world) normally results in all sort of nonsense responses from HMRC.

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By seawych
18th Feb 2014 22:06

CT600 beats CT41G everytime!

If a CT600 was received for p/e 15/12/12 it would have been processed and any duff info about period of dormancy would have been automatically overwritten. A dormancy signal would have resulted in an "exception" but the original date of submission would still be the one written on the record.

But that doesn't explain the penalty.  Like IT, CT return penalties are not for failing to make a return, they are for failing to comply with a Notice to Make a Return.  Unless my one remaining braincell has shorted out, the only way that HMRC could impose a penalty is if they were acting on the basis that the company was 'live' in y/e 15/12/12.

Either I'm missing something or the OP has missed some detail??

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Stepurhan
By stepurhan
19th Feb 2014 08:37

Not necessarily

HMRC have on occasion created penalties and interest in an effectively retrospective manner.

Going back several years now, but I once had a current year PAYE payment assigned to the previous year. I phoned up and got this moved to the correct year. I then queried about some interest that had appeared on the account and was told that would now go away now that the payment had been moved.

Their original reasoning was as follows

If this payment was due last year, it is now several months lateIf a payment is made several months late, interest is chargedSince this payment is being made several months after the period we're assigning it to, it must therefore be several months late and liable to interestWe will calculate the interest based on the amount of the payment, even though this relates to no liability we are aware of.

So in this case HMRC could be retrospectively creating a deadline for a return they previously thought wasn't due at all. They are then using that retrospectively created deadline to justify a penalty.

Like I said, battle this insanity.

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By johngroganjga
19th Feb 2014 09:05

Agree with all the above - but surely this is quite simple.  You have the filing receipt.  Show it to HMRC (if you have not already done so).  If they persist in their claim that a penalty is due, tell them that if it is their case that the filing receipt is a forgery you will press for an immediate tribunal hearing without further ado.  Tell them that it is for the tribunal to determine whether on the balance of probability a document is forged or not.

That should be the end of the matter. 

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Stepurhan
By stepurhan
19th Feb 2014 09:11

The complication is that HMRC are claiming the return was received, but not accepted. If not accepted, then not filed before the deadline.

So it isn't that HMRC are saying that the receipt is a forgery. They are instead claiming it acknowledges receipt only, and not a completed filing.

Ridiculous stance on their part of course, but nothing new there.

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By johngroganjga
19th Feb 2014 09:23

Admittedly I am assuming that the return submitted was complete and in order, and there was no good reason for its rejection.  If there was a good reason then the position for the taxpayer is, I agree, completely different.

Any consequences of HMRC failing to "accept" a perfectly complete and proper return submitted on time is of course entirely their problem.  If it is their case that they were justified in rejecting the return let them set out their grounds.  If you don't agree, tell them that it is for the tribunal to decide whether the return submitted was a valid return. 

 

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