Late filing penalties

Appeal- any point

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I have a friend who I have just helped submitting his 2019/2020 return (late) He had received the late filing penalty notice showing 90 days at £10 plus the minimum £300 filing penalty, a total of £1,200

His income tax return enties are his P60 and a P11D, both of which HMRC already had, (in fact his personal tax account pre populated these, there was nothing else to enter. (Higher rate/additional rate most years re bonus payments)

His liability for the year is £38 (2021 they owe hin £1,800)

Anyone had any joy getting a reducction on these types of penalties , if so what was the argument?

 

 

Replies (17)

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By bendybod
06th Oct 2021 12:18

We've applied previously on the basis of appealing to HMRC's better nature, given the tax already notified to HMRC by way of PAYE and minimal loss to the treasury, which our client is more than happy to rectify.
I would say he appeals on the basis of not understanding that he needed to submit one given that all of his income was declared under PAYE. I would be extremely surprised if they didn't exercise goodwill on the basis that the loss to the treasury is £38 which I presume he is more than happy to pay over and the effect of the penalties is therefore disproportionate given that it is a genuine oversight by an unrepresented individual rather than deliberate.
Of course, they can tell him to do one and pay the £1,200 but it is worth a try since the effect of not trying is a £1.200 liability.

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By Paul Crowley
06th Oct 2021 12:27

This now down to HMRC discretion
The numerous first tier tribunal successes result in a change to the rules.
No Human needs to authorise penalties any more

If clients want to appeal I get them to hand write the appeal themselves, then send it in myself with a Comp slip

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Replying to Paul Crowley:
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By More unearned luck
06th Oct 2021 13:51

I'm not sure that penalties ordinarily have to be 'authorised' but decisions to impose them still need to be made by human beings. All s 103 FA 2020 did was to say that anything that could be done by an officer could now be done by the commissioners or their employees. The commissioners are human beings and so are the people who work for them. It did say that these human beings could use computers in their work but I don't think that anyone doubted that they could do that before FA 2020.

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By Wanderer
06th Oct 2021 12:31

Any personal or business reasonable excuse that can be put forward, pandemic-related?

https://www.icaew.com/-/media/corporate/files/insights/tax-news/20201218...

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paddle steamer
By DJKL
06th Oct 2021 12:43

There is no excuse, up to April 2019 whilst I was in practice I used to help him do his return( a no fee submission) , from 2019/2020 he was told to find someone else to do it as I no longer had access via my agent code, he can certainly afford an accountant, catch is life is busy, tax is boring, he didn't bother.

I have already told him he really has no real excuse, but the handwritten contrite letter sounds a decent way to work, at least he will have to write it out .

My gut feel is they will whip the £38 and the £1,200 from the £1,800 they owe him re 2020/2021 and give him the balance.

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By SteveHa
06th Oct 2021 12:45

Have you filed the Return? If not, S8B is the way to go.

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Replying to SteveHa:
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By More unearned luck
06th Oct 2021 13:35

If "submitting" means what I think it means then the answer to your question is 'yes'.

Filing/submitting the return appears to have been foolish for the reason you give.

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Replying to More unearned luck:
By SteveHa
06th Oct 2021 13:43

Ahh - I missed that in the OP. C'est la vie.

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Replying to More unearned luck:
paddle steamer
By DJKL
06th Oct 2021 13:52

Thank goodness I have no contractual relationship with the individual, looks like he should not have submitted his return.

Thanks for all responses, looks like contrite letter is all that now may be done.

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Replying to DJKL:
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By More unearned luck
06th Oct 2021 16:03

If you want to make legal history you can try this argument as regards the daily pens:
1 ) Para 3 sch 55 FA 2009 contains no express requirement upon HMRC to decide to issue the £100 penalty.
2) yet HMRC must have a discretion as a) Para 20 gives the taxpayer the right to appeal against the decision to impose the penalty and b) recently HMRC took the decision not to impose the penalty as regards 2020 returns filed in Feb.
3) Ergo HMRC decision making power lies outside of sch 55, probably in their care and management powers in CRCA 2005.
4) Unlike para 3, para 4 contains an express requirement for HMRC to make a decision. In Donaldson it was held that an on high decision to impose daily pens in all cases met this sub para, but the following, perhaps, gainsay that finding:
a) it follows from 1) to 3) that the Donaldson finding makes par 4(1)(b) nugatory
b) the former regime required HMRC to apply to the tribunal first and they had a policy of only apply daily pens in exceptional cases (the usual one being if a determination had been made) and it seems unlikely that Parliament intended that a radical change from exceptional to routine was what it intended
c) the rule against doubtful penalisation (its unclear if decisions have to be general or specific) makes the penalty unlawful.

Remember the burden of proof on all aspects is on HMRC.
Good luck. Please report back here your success or lack thereof with this argument.

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By mbee1
06th Oct 2021 13:29

If the Returns haven't been filed, call them and ask them to be withdrawn on the basis that the SA criteria isn't satisfied.

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Replying to mbee1:
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By Not Anonymous
06th Oct 2021 14:40

mbee1 wrote:

If the Returns haven't been filed, call them and ask them to be withdrawn on the basis that the SA criteria isn't satisfied.

But this suggests that the criteria probably was satisfied and HMRC are not going to withdraw a return if income (and therefore potentially ANI) exceeds £100k.

"Higher rate/additional rate most years re bonus payments"

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Replying to Not Anonymous:
By SteveHa
06th Oct 2021 14:55

I recommend TMA 1970 S7 rather than HMRC (mis)guidance.

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Replying to SteveHa:
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By Not Anonymous
06th Oct 2021 15:26

SteveHa wrote:

I recommend TMA 1970 S7 rather than HMRC (mis)guidance.

I realise that it isn't legislative but once the return/notice to file has been issued there is legislation in place and withdrawal of the return is in HMRC's gift.

And that is a scenario where I don't believe they would agree to withdraw the return.

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By Joe Alderson
06th Oct 2021 16:48

There's never any harm trying, I've had some appeals that I expected to be rejected result in a waived penalty and then others where I've thought the excuse was more valid require a second appeal. It doesn't take long to fill in the Penalty Appeal form, so it's worth a shot, and should the appeal fail there's nothing gained, nothing lost. In my experience I find that a lot depends on the HMRC officer who picks the appeal as well as the reason for the appeal itself. I've sometimes wondered if the appeal was actually read.

If it does fail then it will likely be subtracted from any credit on the clients accounts, if there's no credit then I'd advise that they pay it now if they can, and avoid increasing interest. Then if the appeal is a success they can get the payment back as a refund.

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By Homeworker
11th Oct 2021 10:25

There used to be a concession called "equitable liability", which allowed HMRC to remove charges that were out of proportion to the actual liability. It has been renamed "special relief" and I think you can find the detail here:
https://www.accaglobal.com/uk/en/technical-activities/technical-resource...

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Replying to Homeworker:
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By Software Seeker
11th Oct 2021 15:10

Doesn't that only apply to the tax, though, rather than penalties?

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