Late payment appeal rejected

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Taxpayer who was PAYE only had just snuck over the £100k threshold in 22/23, but hadn't realised the implications. Received no notice to file, then in March, received a fixed penalty notice.

The return went in and indicated a small liability. Taxpayer received a late payment penalty. Payment in full was made.

Turned out that taxpayer had been made redundant in July 23, had been overtaxed through PAYE on settlement amount which was received in November. Taxpayer had been out of work for the rest of 23/24. There was almost £10k repayment for 23/24.

Appealed the late filing penalty on basis that had been PAYE all her career, and had not received a notice to file. Also appealed the late payment penalty, on the basis that she had no notice to file, so did not know requirement to pay AND had actually overpaid in relation to income tax due to PAYE deductions that had resulted in almost £10k repayment, which should be clear from real time information available to HMRC.

Taxpayer's late filing appeal was upheld. Interestingly, the late payment appeal decision has the wrong year (says 21/22, when it was 22/23) - this appeal was unsuccessful on grounds that you need to treat each year separately. Seems like a case of computer says no! Typically they were considered by 2 different Revenue staff.

Couple of questions - If the appeal decision is for the wrong year, should I ask for a review or perhaps instead tell them to consider the correct year?
Is there any mileage in the PAYE overpayment angle do you think? Is it worth emphasising the fact the late filing appeal was upheld i.e. if they accept that she didn't know she had to file, then they should except that she didn't know she had to pay on 31 Jan?

Any pointers appreciated.

 

Replies (11)

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By Not Anonymous
19th May 2024 13:08

"The return went in and indicated a small liability. Taxpayer received a late payment penalty. Payment in full was made."

If the liability was "small" then presumably the late payment penalty was very small.

Is this worth your time/costs?

HMRC tend to take a firmer line with late payment penalties compared to late filing, at the end of the day the client has had the benefit of the unpaid tax.

As far as the 23/24 overpayment is concerned unless the tax return for that year was filed before the client paid the liability for 22/23 I think you're on a hiding to nothing with that angle.

See "Set-off within SA to an earlier tax year" here,

https://www.gov.uk/hmrc-internal-manuals/self-assessment-manual/sam110220

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By FactChecker
19th May 2024 17:58

I'm having difficulty working out what exactly happened (or not) and in what order ... which may just be a reflection of exposing my brain to a sunny Sunday afternoon.

But ... "if they accept that she didn't know she had to file, then they should except that she didn't know she had to pay on 31 Jan?"
The payment deadline isn't set by reference to the issuing of a NTF (although there are cases where the notice is issued late and so the deadline for filing is prolonged).
And it is the taxpayer's responsibility (even without a NTF) to inform HMRC that events mean it is likely that tax is due ... with such tax having a payment deadline of 31st Jan.
So how does not knowing "she had to file" provide an excuse for late payment?

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By Paul Crowley
19th May 2024 18:53

'Taxpayer who was PAYE only had just snuck over the £100k threshold in 22/23, but hadn't realised the implications. Received no notice to file, then in March, received a fixed penalty notice.'
This does not add up to me. No idea what is meant by fixed penalty notice. It sounds like a speeding or parking penalty.
If it was a late filing penalty then the notice to file got lost somewhere. Did the client already have a UTR? If not then at least 2 letters went missing. Did he have a Gov Gateway and sign up for no paper? Did he move and not advise the employer or HMRC?
It is a fact that he filed late and paid late. He should have notified HMRC and did not HMRC issued a notice to file and client ignored it. I think client got a good deal. Ye 2024 has got nothing to do with ye 2023, which is what HMRC are trying to tell the client and you.

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By culture
19th May 2024 20:47

Thank you all for your prompt and very helpful replies.

SAM110220 makes it clear - the PAYE offset argument is unlikely to be effective.

Thanks again.

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By Anthony G Thorne
24th May 2024 10:49

Geraint Jones, Tribunal Chairman, stated in a late filing appeal "a notice to deliver a return is a necessity not a luxury". The penalty is for failing to comply with a notice to deliver a return.

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By More unearned luck
24th May 2024 12:28

"The return went in..." That might have been a mistake.

You have nothing to lose by taking up the offer of an internal review.

The mere assertion that the NTF wasn't received is unlikely to succeed, you need to make a (true) supporting case.

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By SteveHa
24th May 2024 13:41

Quote:
Received no notice to file

and

Quote:
Appealed the late filing penalty on basis that had been PAYE all her career, and had not received a notice to file.

If there was no NTF, why was there a late filing penalty?

It is likely that there was a NTF, and that HMRC can rely on IA 1978, S7 on the basis that it wasn't returned to them undelivered.

Are you sure that you(r client) didn't simply ignore or overlook the NTF?

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Replying to SteveHa:
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By Paul Crowley
24th May 2024 14:08

+1
Op can look it up on the agent portal.

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Replying to Paul Crowley:
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By More unearned luck
24th May 2024 14:41

A date in a field on HMRC's system is not evidence that an NTF was posted.
The presumption in s 7 can be rebutted by the facts.

If needs to, I sure than HMRC could adduce evidence of posting and then the taxpayer would have the uphill battle of proving a negative.

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Replying to More unearned luck:
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By Paul Crowley
24th May 2024 15:14

They have already remitted the late filing penalty.
OP wants the late payment penalty remitted as well.

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Replying to Paul Crowley:
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By More unearned luck
24th May 2024 17:52

I didn't appreciate that. So, the OP also has an RE for not knowing how much tax, if any, was due on 31 Jan, but that doesn't equate to an RE for paying late? Perhaps the client delayed payment after knowing what was owed so the second element of the RE was failed.

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