Good day all,
I am somewhat unsure of the penalty regime as follows:
A taxpayer has not filed self assessment tax returns for the last four years. Taking the first year, his late filing penalty will be £100 plus £900 plus £300 plus £300. Does that year’s late filing penalty stop there or does it re-occurred every late year. Similarly, does the 5% late tax payment penalty stop after the July late payment? This is assuming that he isn’t penalised for deliberately withholding returns.
Thanks
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Replies (6)
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It depends.
What notices have HMRC issued?
Are they valid?
Does the tax payer have any reasonable excuses for some or all of the penalties?
I dont think I have ever seen HMRC go into daily penalties on consecutive years. I am not sure that meets the criteria of their use.
I'm assuming they issued notices, as they wrote to him, telling him that the returns were outstanding. No excuses from the client to appeal, he knows that he has been negligent in filing. I just wanted to give him a breakdown of penalties that he will be liable for. I just thought it odd that, what with HMRC's love of penalties, I couldn't see that the penalties stopped after a year!
I wouldn't be trying to work out the exact penalties at this point, I would instead be confirming the exact position with HMRC.
Were the returns issued, should they have been, did the client know the returns were expected? What penalties have been issued, is there information to file the returns? Can you file them?
Based on the answers the likely course of action is to wrap up the SA obligations for the client, either by having the returns withdrawn or by filing them, then find out how much HMRC want in penalties and, if reasonable, negotiate.
I doubt the penalties will be as much as the maximums you outlined x 4 but maybe tell the client that's how much they could be charged, might help light a fire under them for the future.
Thank you all for your replies. I like to advise a client as to what he can expect to pay. I didn't want to tell him an amount and then find he had to pay that, x a number of years for each year that was outstanding.
I would give him the worst case scenario, max X 4 plus 10% surcharge on unpaid tax. If he ends up paying less then you will earn brownie points.
First thing though, as others say, is to see if the returns are valid. If you can argue that the client should not be an SA case, then pursue that argument and do not send in the returns in the meantime.
Take a lesson from Nick (Mr Loophole) Freeman and check that the SATRs have been issued exactly in accordance with the Taxes Acts. NF isn't a magician, he simply uses the Road Traffic laws to the letter.
