Failure to notify, late filing and late payment penalties and behavior abatements

Failure to notify, late filing and late payment...

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I am completely confused between failure to notify, late filing and late payment penalties and behavior abatements.

Also between the old rules pre 2009 and post 2009 new rules.

I have a client who has not disclosed his income since 1994! HMRC have agreed they will ignore the period up to 1999 and start to assess him as if he started in 2000.

In the period from 2000 to 2009 (old rules) he owed only about £200 tax and NI on average per annum; HMRC have agreed the abatement for the seriousness of the offence be restricted to 20% therefore they will charge a penalty of 20% for the years up to 2009.

Trouble is I can't find the old rules so don't know what the 20% charge will be on! Will it just be 20% x the unpaid tax (ie 20% x £200 per annum on average?) or were there other penalties that were in place at the time as well that may apply (eg like the 100 + 300 + 900 + 300) that exist now?

Since 2009 HMRC have agreed total potential lost revenue of just £1042.00 but have agreed my client acted in such a way that an 85% reduction will be granted in respect of the quality of his disclosure; they say this only refers to the disclosure itself not the overall penalty which I don't quite follow.

So I can't quite work out what they are saying re the period since 2009 either.

Will there be fines of £1600 per annum for each year because of late filings and failure to notify plus a fine of £1024 x 15% (100% - 85%).

Or will the 1600 per annum fines be reduced by 85% too (unlikely I would think.

If anyone could have a stab at what you think HMRC are looking to charge I really would be very grateful.

Replies (2)

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By Cloudcounter
22nd Mar 2015 18:42

There will

only be late filing penalties where a return has been issued. As HMRC didn't know of his existence to issue a return, those cannot apply

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By anneaccountant
22nd Mar 2015 19:37

Thanks Cloudcounter.

So does that mean my client who has completely failed to notify HMRC that he was self employed for over 20 years and has been the subject of a "discovery" is alot better off than someone who had notified HMRC that he was self employed but just failed to submit his tax returns?

The latter would be hit with several late filing notices of £1600pa (under the new rules) as well as penalties for late payment.

However you are indicating my client is only going to be fined a percentage of the potential lost revenue and the lost revenue is very small.

Is that correct? It hardly seems fair although my client will be pleased to hear that!

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