As HMRC prepares to deal with up to half a million extra Self Assessment tax returns in January because of changes to child benefit, it will be given new powers to relieve taxpayers of the requirement to file a return.
Legislation will be introduced in Finance Bill 2013, following consultation, that will let HMRC withdraw a notice to file a SA tax return, when it agrees one is not required. This provision will come into effect from the date of Royal Assent to Finance Bill 2013 (see Finance Bill overview of draft legislation, section A215).
Under the existing penalty regime, any individual who receives a notice to file is subject to a penalty if they do not file a return by the filing date. These penalties are due if it turns out that a return is not needed or it shows there is no tax to pay when filed.
HMRC can use discretionary powers to withdraw a notice to file and apply a ‘special reduction’ to cancel any penalties. But the new Finance Bill clauses will put this on a statutory basis.