Another appeal needed?

HMRC penalty raised after SA account apparently closed

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Ex client registed for self employment in March 2021 without telling me.  He had negotiated voluntary redundancy from teaching job after serious health problems involving operations and had thought he could do training on recovery. In fact recovery took longer than hoped for and he never started self employment and eventually got another job under PAYE. Didn't think he needed to do tax return.  I hadn't taken him off my HMRC list as he had been aiming to buy a rental property so I received copy of late filing penalty notice this year.  Filed appeal with health information & did get a return ready for filing (no tax due as just PAYE income) but HMRC responded to the appeal at the start of May saying that SA account had been closed and no return required and appeal accepted.  Yesterday £1,200 penalty notice received - dated 1 week after date of letter saying no return required.   I see that when HMRC say they have closed the account & no return is required, what they have actually done is marked the return as received at the start of May.  Presumably the penalty computer has taken the receipt date & just issued another penalty notice.  Are HMRC likely to get their act together & cancel this in due course or is another appeal required?

Replies (10)

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By rmillaree
18th May 2022 08:41

You have massively overcomplicated things here - if client does not meet the requirement to file a return NEVER file a return particularly if penalties are involved that would need to be apealed later were return submitted . Simply ring hmrc and request notice to file be withdrawn you should find out pronto if there is any hidden reason why hmrc would not cancel return (very rare), No formal apeal needed ref any penalties when returns cancelled.

The good news is that any incorrectly generated penalties with regard to "cancelled" returns are easily sorted simply ring hmrc and advise penalties have ben generated in error and they will remove - job done. Note its unlikley they will reaslise their error here without you getting out cattle prod out- thankfully like cows relevant prodding should do the job here.

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Replying to rmillaree:
By Paul D Utherone
18th May 2022 08:50

I don't think they did submit.

HMRC's method of removing requirement to submit a return under TMA s8B (which I think is what happened here - OP wrote and said S/E never started & no return required) is to clear the return from the SA record by marking it as received, not removing the entry in the SA record.

I would be inclined to ring the Agent line and point out that they have accepted that no return is required and ask HMRC to cancel all penalties (as should have happened anyway!)

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Replying to Paul D Utherone:
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By rmillaree
18th May 2022 09:01

"I don't think they did submit."

I am aware of the fact the return was not submitted - my point being no need to worry about return having to be prepared in the first place (wasted time going down that route) and no need for formal appeals at all (again wasted time) - nothing a simple phonecall or two to hmrc won't make go away easily with minimum fuss.

One of the big issues with paper formal appeals is the time it takes hmrc to sort too - (client direct online appeals to get sorted much faster) whereas as you say with quick call to hmrc agent line incorrect penalties will always be removed reasonably quickly barring major it glitches.

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Replying to rmillaree:
By Paul D Utherone
18th May 2022 10:54

Fair enough. I misunderstood your first sentence and answered to that. "Read the whole question" as was drummed in (but clearly did not stick) by a tax tutor many many years ago

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By K81
18th May 2022 08:30

I had a similar case recently but it was a duplicate UTR.

It may be that the officer who closed the record did not tick the right box to cancel penalties also, I would call HMRC to get sorted.

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By ireallyshouldknowthisbut
18th May 2022 09:15

If it helps the record always shows as "filed" the date of the cancellation which is normally the day you call.

My understanding was if you cancel before due date, no problem.

If you cancel after the deadline the penalty is auto, which then needs appealing if you have grounds to not have cancelled before the deadline.

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Replying to ireallyshouldknowthisbut:
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By rmillaree
18th May 2022 09:25

"which then needs appealing if you have grounds to not have cancelled before the deadline."

I can confirm there is no "formal appeal" needed - you simply need to point (call to helpline) out to hmrc that penalty is generated in error and they will always cancel.

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By legerman
18th May 2022 09:56

Very similar experience recently with a duplicate partnership utr. Client got late filing penalty of £100 and I managed to get the return cancelled on 28th April. Client then got £870 late filing and I deduced that HMRC had marked the duplicate utr as filed, but treated it as a paper return due 31st October, and the daily penalty kicked in on 1st Feb. Hopefully I've managed to get those quashed as well.

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By TessaW
19th May 2022 08:20

Thanks for all comments. I guess that despite all experience, I still had a vague hope that HMRC might correct their own error.
Called the agent helpline & got through in 3 minutes (think this only happens between 8am and 8.15). It was admitted that this was their error - client may still get a chasing letter as the penalties payment due date is in June so that may be too near to stop, but I was told that we can ignore anything further. I guess it is still fingers crossed that it will have been dealt with correctly now.

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Replying to TessaW:
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By rmillaree
19th May 2022 09:17

"I guess it is still fingers crossed that it will have been dealt with correctly now."

I would have no specific reasons to worry - albeit until its gone it aint gone !

Note there are two different scenarious here - either advisor sorted there and then in which case i would expect very timely update possibly within 3 working days . Most advisors should be able to sort there and then for this issue- and its rare that they mess up.

Then there is the dreaded - we are sending over referral to cancel - for those always ask for estimated timescale and check on that day (or a couple of days later). For obvious reasons referrals are much more likely to need chsing up at a later date.

To be fair to hmrc the solution here is fairly painless when you understand how things work.

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