Self assessment penalties cancelled by tax office

Self assessment penalties cancelled by tax office

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Hi all

A few of our clients have outstanding self assessment tax returns for the past few years and hence had been issued with late filing penalties of up to £1,600 per year. However, we have noticed that for some of our clients the tax office have cancelled the penalties even though the return has not been submitted. The return also shows as outstanding.

Has anyone else come across cases like this? Do you know the reason why the tax office have cancelled these penalties?

If we submit the self assessment return for the tax year in which the penalties have been cancelled, will the tax office bring back the penalties?

Thank you in advance for your help

Replies (7)

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By User deleted
24th Aug 2015 19:26

Probably not relevant but there were reports in the news about SA penalties:

http://m.accountancyage.com/aa/news/2410851/hmrc-waives-gbp100-fines-for...

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By Patss
25th Aug 2015 13:40

Thanks for your response.

However, the link is not relevant in this case.

In our case the penalties were cancelled before submission of the tax returns. We have also spoken to the tax office about this and they are not giving a clear answer as to why the penalties were cancelled. Does anyone know why they are cancelling these penalties and whether they will bring these back upon submission of the return?

Thanks

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By JCresswellTax
25th Aug 2015 14:13

Has the return been submitted though?

HMRC's procedure in cancelling the issue of a tax reutrn is to capture a nil return on record.

So if someone convinved HMRC that the return shouldn't have been issued in the first place, instead of cancelling the return, they would capture a Nil return and cancel all the penalties.

I would guess that this is what happened in your cases.

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By lesley.barnes
25th Aug 2015 14:18

Noticed this on a new client

A new client had 3 years of late tax returns, the penalties have been offset by the same figure in "less other adjustment" The returns have now been submitted but the penalties haven't been automatically reinstated. However the client is due CIS refunds for each of the 3 years plus tax year 2014/15 and the refunds haven't been released they have been passed to another department for approval. I don't know if the penalties will be reinstated as part of this process. The client claimed he received no correspondence from HMRC for any of the missing returns, no statements or penalties. Prior to this he was PAYE and he contacted HMRC when he became self employed. He hadn't moved house in this time. What I did find was someone at HMRC had put a block on his account to stop post going out but it was still being generated because I can see statements on the system, they couldn't tell my why or how long it had been blocked. 

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By Patss
25th Aug 2015 14:22

The return still shows as outstanding

We understand that but we have not even contacted HMRC for the clients in question. They appear to have cancelled it automatically which is strange. The return also shows as outstanding.

If we submit the SA return and the client is due a refund, will they process the tax refund or will they reinstate the penalties? Has anyone come across a case like this before?

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By JCresswellTax
25th Aug 2015 14:24

Could the penalties

Have been moved to the PAYE code for collection?

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By Patss
25th Aug 2015 14:48

No, the liabilities have not been moved to the PAYE tax code for collection. They have been cancelled completely.

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