Appealing late SATR fines

No tax liability but heavy fines

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I’ve a H&W ltd who were normal PAYE e’ees until May, which is when they incorporated and engaged with us. Unbeknownst to me, they had prepared SA100s themselves for the few years prior to 2016/17. 

They didn’t tell me this (or provide UTRs) when they came onboard and I didn’t ask. 

Around Nov 17, they asked whether they needed to do a SATR, I said “not for 2016/17, you will next year”.  The first I knew that they should have done is when they sent me the late filing fine of £100 (sent to me 26 June). I got them to sign & submitted tax return the same day. 

Weve just had through a fine for £570, being £10 x 57 days past the 01.03.18 higher penalty deadline. 

H has a refund of £8.15, W has a £nil return. 

Advice as follows please:

1. Can I appeal the fines? 

2. Assuming not, what would you do in terms of you/then paying the fine? Typically, if it’s our fault we pay. 

 

Thanks 

Replies (8)

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By SteveHa
10th Jul 2018 09:53

I think you're stuffed. The mistake was submitting the Returns, when you could have gone for S8B withdrawal instead (sadly, with submission of the Returns, that ship has sailed).

Unless there's a demonstrably reasonable excuse for non-submission, I fail to see what grounds for appeal you have, UNLESS:

You could take a punt on the reasonable care at FA2009 – Sch 55 Para 23(2)(b). Take a look at Brian Mabe v HMRC (TC5098) and SAMUEL PHIPPS (trading as OCEAN TILERS) v HMRC (TC6236) for a couple of examples where this has worked.

I recently succeeded in an appeal on the same grounds, though that was only for the £100 penalty, and only when I applied to the tribunal did HMRC cave (it never went to the hearing).

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By JCresswellTax
10th Jul 2018 10:17

This is your problem 'I said “not for 2016/17, you will next year”. and is a dangerous game saying that without checking if HMRC had issued one.

That being said, the client could have advised you that they been issued with notices to file, so you could say the blame is shared and offer of to pay 50% of the penalties.

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By Vaughan Blake1
10th Jul 2018 15:17

Oh dear! In theory you started acting in May (2017?) so should not have expressed an opinion for 2016-17 without making further enquiries.

A S8B withdraw might have worked. Nil liability isn't enough by itself, it also requires nil 'reportability'. So for example a loss making B2L property would still require a SATR. It is also a bit nerve wracking making the S8B application and watching the return enter daily penalty territory!

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By Ammie
11th Jul 2018 10:42

Always worth an appeal, but I agree with the other comments.

Although you may have made an error without checking, it's also worth advising the client that they should have been aware of a notice to deliver, in the absence of which you assumed (incorrectly) none was. Still, more care should have been adopted when considering the original need to file a return.

Incidentally, a £100 late filing penalty would have been issued before 1 May (not 1 March as stated), which should have alerted the failure and which I would have expected the client to be jumping up and down when they received it. It seems odd that it got the next tier of penalties before any action had been considered. Sounds like the client must accept, at least, some responsibility, if not most.

Not what you want hear I know.

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Replying to Ammie:
ALISK
By atleastisoundknowledgable...
11th Jul 2018 10:51

Hi Ammie,

There was a £100 fine issued, which he client passed to me on 26 June, so I immediately submitted the return (post client approval).

I hurriedly paid the £100 there & then, which I know isn’t helping my case either for appeal or with splitting the new fine with the client.

I’m going to have to take the hit & chalk it down as an expensive lesson which will eat up all of my profit for the next 2 years on this client. They are however the sort of client that I want to grow, so so-be-it.

Thanks for everyone’s comments.

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By pauljohnston
11th Jul 2018 11:26

I dont see the problem. YOu told the client that they did not have to submit a 2016-17 Tax Form but they already knew that the should because of notification to file from HMRC. IN February/March 2018 they would have received a further notice which they ignored.

My feeling is that the £100 you have paid covers your position. However it depends how good a client he or she is on how you proceed.

As a matter of course we now check HMRC wesite to make sure that returns are not required for any periods.

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Replying to pauljohnston:
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By Matrix
11th Jul 2018 11:37

How do you check? Do you get them to submit a 64-8 with an NI number?

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By crackofdawn
11th Jul 2018 12:15

HMRC does have a soft side. A simple phone call from your client to HMRC giving some excuse could see the fine eradicated. Two of my clients had debts of over 2k prior to joining me. One phone call, one excuse and debt was wiped out.

You ve ntg to loose in trying....

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