Very late self assessment

I took on a new client last year & submitted a 64-8 in November 2009.

I was talking to HMRC approx 3 weeks ago, to make a payment arrangement for my client, when the person I was talking with, mentioned that the 2003/04 tax return had never been submitted. She agreed I had never been made aware of this, but said HMRC had spoken to my client on a couple of occasions. She also said, if it is not sorted out soon, then my client will receive penalties of £100 per day until the return is received.

I spoke with my client who is adamant he was not aware of this & on checking back on his paperwork, discovered it was the year he had his van broken into and set fire to. At that time he kept his receipts in his van and some of them were smoke damaged.

I have looked on HMRC website and discovered that although it states 2003/04 tax return has not been received there was a charge of tax for the year, made up of 2 payments on account and a balancing charge which was a Revenue determination raised in July 2005. He had received 2 late penatlies for the year prior to the determination but none since. All the tax due for 2003/04 & penalties have been paid.

This raises various questions:-

1) Can HMRC chase for a return and/or impose penalties for a return due over 6 years ago

2) If they had issued a determination figure, surely they must have known something at the time & therefore by raising a determination, this closes the matter.

I still have not received anything in writing from them and as far as I am aware, they have not issued any penalties to date for the 03/04 period.

Any advice would be greatfully received, in the interim, I have asked my client to check back near the period of July 2005, to see if they have any paperwork regarding the determination.