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Major problem - Corporation tax penalty?

Corporation tax penalty - am wanting to appeal

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Hi Guys in a little bit of a pickle here.

My accountant filed accounts for aug 18 to jul 19, the accounting were submitted on august 2020. I assumed they sent the corporation tax off at the same period but she did not (sadly she suffers from health issues), I have now recieved the letter this month stating that it hasnt been submitted, would this be sufficent grounds for an appeal? We have  had major hardship during this covid period and our acountant not being well has futher worsesned the situation for us. (Our first missed corporation tax return by the way). Would really appreciate any advice guys. I'm not getting any reply from her what so ever even now. |Thank you

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Stepurhan
By stepurhan
23rd Aug 2021 08:23

You can try writing to HMRC yourself and appealing on this basis. However, you should be aware that reliance on another is often rejected as an excuse for appeal. The responsibility to file on time falls on the directors.

Regardless of the reasons for your current accountant not being contactable, you should look for a new one now. Any appeal can only be helped by you taking strong action to rectify the situation. If nothing else, you need to get your corporation tax filed as soon as possible to avoid further problems.

That said, there is one thing that doesn't ring true about your situation. The corporation tax return for a July 2019 set of accounts was due for filing July 2020 (so both accounts and tax would have been later regardless). I find it unlikely that this is the first letter you have received in over a year.

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Replying to stepurhan:
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By adam_118
23rd Aug 2021 12:12

stepurhan wrote:

You can try writing to HMRC yourself and appealing on this basis. However, you should be aware that reliance on another is often rejected as an excuse for appeal. The responsibility to file on time falls on the directors.

Regardless of the reasons for your current accountant not being contactable, you should look for a new one now. Any appeal can only be helped by you taking strong action to rectify the situation. If nothing else, you need to get your corporation tax filed as soon as possible to avoid further problems.

That said, there is one thing that doesn't ring true about your situation. The corporation tax return for a July 2019 set of accounts was due for filing July 2020 (so both accounts and tax would have been later regardless). I find it unlikely that this is the first letter you have received in over a year.

Hi thanks for the reply.

Yep the reliance bit is not great on my side. However to my knoweledge it is the firm time I received a letter regarding the overdue corporation tax. Any ideas at what other points it is sent?

About getting it fillied I can however the profit figures shown need to be changed as at the moment I think they have been based on estimated figures rather than off the company accounts.

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Replying to adam_118:
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By Leywood
23rd Aug 2021 12:59

Be careful, dont go messing about with it yourself. The CT return will generally not match the accounts as it will have been adjusted for items not allowable for tax for a variety of reasons.

Have you not paid the CT already though?

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By jonharris999
23rd Aug 2021 08:37

.

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By jonharris999
23rd Aug 2021 08:37

I'm sorry not to give general advice, which I realise you have asked for - and that it is frustrating for some taxpayers who post a question here and receive the answer "get an accountant". However, in your case - get an accountant, urgently. They can take over the authorisation you gave your previous accountant and sort this out very quickly. Don't try to do it yourself, and bear in mind that a new accountant isn't even costing you anything extra, since presumably you had already budgeted for fees to your old accountant which you do not now need to pay.

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Replying to jonharris999:
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By Tax Dragon
23rd Aug 2021 08:48

This is sound advice and I agree - with the caveat that we don't know the time limit for the appeal. If that's, like, today, then I think the OP should get something in and urgently follow stepurhan's and your advice.

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Replying to Tax Dragon:
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By Mr_awol
23rd Aug 2021 09:33

Regardless of the time limit I would advise getting something in now - even if it is just a letter from the OP explaining that they wish to formally appeal, and setting out the basic issue that their accountant had filed the accounts but seemingly not the CT600, and now wasn't replying to correspondence at all. Also, assuming tax has been paid by the due date, stating this fact.

As the previous accountant is not replying to correspondence it is doubtful they will reply (quickly if at all) to a professional clearance letter. Any new advisor taking this on may put a line stating they will commence acting if not heard back within 2 weeks, or may deem it acceptable under the circumstances to commence acting in this aspect immediately. Most of us though would probably fire off the standard letter, sit on our hands, and hope to get something back fairly promptly. That could take the remaining appeal time.

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Replying to jonharris999:
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By adam_118
23rd Aug 2021 12:13

jonharris999 wrote:

I'm sorry not to give general advice, which I realise you have asked for - and that it is frustrating for some taxpayers who post a question here and receive the answer "get an accountant". However, in your case - get an accountant, urgently. They can take over the authorisation you gave your previous accountant and sort this out very quickly. Don't try to do it yourself, and bear in mind that a new accountant isn't even costing you anything extra, since presumably you had already budgeted for fees to your old accountant which you do not now need to pay.

Hi good advice will do now thanks.

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Replying to jonharris999:
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By adam_118
23rd Aug 2021 12:13

jonharris999 wrote:

I'm sorry not to give general advice, which I realise you have asked for - and that it is frustrating for some taxpayers who post a question here and receive the answer "get an accountant". However, in your case - get an accountant, urgently. They can take over the authorisation you gave your previous accountant and sort this out very quickly. Don't try to do it yourself, and bear in mind that a new accountant isn't even costing you anything extra, since presumably you had already budgeted for fees to your old accountant which you do not now need to pay.

Hi good advice will do now thanks.

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By Tax Dragon
23rd Aug 2021 08:43

Try it. It doesn't sound like you have any better grounds for an appeal. Good luck and please let us know how you get on (per the Aweb motto: give and take*).

Btw, you need to get on and deal with your filing for July 2020, to avoid a repeat (and you won't be able to use the same excuse for that year).

*I used to think that this was about the answers... as in, "it might be something like this, give or take." Then I learned a bit about tax and that "or" and "and" are very very different words. "And" means "as well as". So the motto means "give as well as take". Anyway, I digress.

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Replying to Tax Dragon:
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By adam_118
23rd Aug 2021 12:14

Tax Dragon wrote:

Try it. It doesn't sound like you have any better grounds for an appeal. Good luck and please let us know how you get on (per the Aweb motto: give and take*).

Btw, you need to get on and deal with your filing for July 2020, to avoid a repeat (and you won't be able to use the same excuse for that year).

*I used to think that this was about the answers... as in, "it might be something like this, give or take." Then I learned a bit about tax and that "or" and "and" are very very different words. "And" means "as well as". So the motto means "give as well as take". Anyway, I digress.

Hi dude thanks for reminding about the july 2020 just recieved a reminder today for it aswell lol.

Any ideas on what sort of appeals usually have a high success rate? or is it mainly just when deaths or accidents etc have occurred ?

thanks

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Replying to adam_118:
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By Leywood
23rd Aug 2021 12:57

I think you mean dudette

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Replying to adam_118:
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By Tax Dragon
23rd Aug 2021 13:55

adam_118 wrote:

Any ideas on what sort of appeals usually have a high success rate?

Honest ones.

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By Duggimon
23rd Aug 2021 08:59

I think I would always appeal Corporation Tax penalties, unlike other taxes there seems to be something like a 95% success rate on those, including ones I assumed had no chance of being granted.

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Replying to Duggimon:
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By Justin Bryant
23rd Aug 2021 09:43

Yes; that must be right. When was the last time anyone saw an FTT case on CT late filing penalties unlike, say, ATED late filing penalties; yet there must be at least around 1,000 times more CT returns filed each year than ATED returns*?

*even taking into account that any such FTT CT cases may be so boring virtually none get published.

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Replying to Justin Bryant:
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By richard thomas
24th Aug 2021 10:38

I agree that CT penalties are rarely reported by the FTT. But that cannot give any indication of what percentage of CT penalties are successfully overturned because of action by (a) the caseworker (b) a reviewing officer or (c) the FTT in an unpublished decision.

CT penalties dealt with by the FTT will either be decided on paper or as a basic case at a hearing. In a paper case a summary decision is the norm and in heard cases a short decision will usually be issued. In neither case are they reported as the normal rule in the FTT is that only full decisions are reported. There are some judges who seem to issue every basic or paper decision as a full decision, but most do not. So very many appeals against these penalties cases will not be reported.

It is true however that the number of CT penalty appeals coming to the FTT (at least to me) was lower than those for IT returns and probably lower than for some other more specialist penalties like those for RTI and similar failures. ATED is a special case because, like NRCGT, there are specific legal issues about validity of, in that case, the daily penalties.

Another possible reason, or I would like to think so, is that HMRC realise that in Khan Properties Ltd v HMRC [2017] UKFTT 830 I held that a CT penalty could not be issued automatically, a decision against which HMRC did not appeal.

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Replying to Duggimon:
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By adam_118
23rd Aug 2021 12:15

Duggimon wrote:

I think I would always appeal Corporation Tax penalties, unlike other taxes there seems to be something like a 95% success rate on those, including ones I assumed had no chance of being granted.

Thanks dude thats crazy high %. What sort of reasoning have you seen accepted and what sort of stuff is completed rejected ? thanks

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RLI
By lionofludesch
23rd Aug 2021 09:38

It's worth writing a letter yourself. I'm not sure whether it's worth pursuing after an initial rejection.

You need to weigh up the value of your time against the penalty. Be pragmatic.

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Replying to lionofludesch:
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By adam_118
23rd Aug 2021 12:16

lionofludesch wrote:

It's worth writing a letter yourself. I'm not sure whether it's worth pursuing after an initial rejection.

You need to weigh up the value of your time against the penalty. Be pragmatic.

THanks will do , makes sense cheers.

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By paulhammett
23rd Aug 2021 13:00

I could be wrong but I don't think Tax Dragon and Duggimon have been referred to as "dude" before. I rather like it.

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Replying to paulhammett:
Scooby
By gainsborough
23rd Aug 2021 13:52

*Chuckle* I really like this too. I'd probably leave it off the HMRC appeal letter though - not sure it would receive the same amused reponse :-).

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By DKB-Sheffield
24th Aug 2021 13:30

Hi

A bit late to the party 'dude' but, having read your post and subsequent responses, I would like to double check...

You OP suggests you have received a late filing penalty.

Your subsequent post suggests you have been given an outstanding payment amount (which you believe is incorrect on account of the profits being estimated).

It may be, as can be assumed from your initial post, that the letter is a penalty determination advising of late filing.

However, it may equally be true that you have received a statement/ notice to pay (which may, or may not, also include assessment amounts - hence suggesting the CT return was not filed (or accepted)). This may include late filing penalties and interest.

In order to satisfy my own curiosity, and in order to validate the previous responses, please confirm:

1. The exact title of the letter you have received?
2. Where this is a statement, if there are late filing penalties (not interest) on there?
3. Whether you actually paid the Corporation Tax liability? Your suggestion that you assumed your accountant had filed would also suggest you have had the CT Return AND knew the liability (otherwise they couldn't have filed it)!

Kind regards

Dave

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Replying to DKB-Sheffield:
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By adam_118
24th Aug 2021 16:23

DKB-Sheffield wrote:

Hi

A bit late to the party 'dude' but, having read your post and subsequent responses, I would like to double check...

You OP suggests you have received a late filing penalty.

Your subsequent post suggests you have been given an outstanding payment amount (which you believe is incorrect on account of the profits being estimated).

It may be, as can be assumed from your initial post, that the letter is a penalty determination advising of late filing.

However, it may equally be true that you have received a statement/ notice to pay (which may, or may not, also include assessment amounts - hence suggesting the CT return was not filed (or accepted)). This may include late filing penalties and interest.

In order to satisfy my own curiosity, and in order to validate the previous responses, please confirm:

1. The exact title of the letter you have received?
2. Where this is a statement, if there are late filing penalties (not interest) on there?
3. Whether you actually paid the Corporation Tax liability? Your suggestion that you assumed your accountant had filed would also suggest you have had the CT Return AND knew the liability (otherwise they couldn't have filed it)!

Kind regards

Dave

Hi Dave

The accounting were filed but the ct600 was not.

The letter states penalty for failure to deliver a tax return.

There was penalties charged and the owed tax aswell as a little bit of interest.

Thank you

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Replying to adam_118:
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By DKB-Sheffield
24th Aug 2021 16:46

Hi

Thanks for confirming.

It sounds (and I'm guessing a bit) that the letter you received will have 2 x £100 penalties (Aug 2020 and Oct/ Nov 2020) and 2 x 10% penalties in Feb 2021 and Aug 2022. The 10% penalties will be based on the estimated CT liability (estimated as no return is filed). You will also likelu have a further £100 for 2019/20.

Did you actually receive the return from the accountant? Or did they only provide the accounts?

If you received the return, did you pay the Corporation Tax due?

Further, did you pay the previous accountant's fees? Did their invoice state that this included accounts AND Corporation Tax?

Clearly, in the event of an appeal, honesty is the best policy. There are no "killer lines" to guarantee a successful appeal. Each appeal is based on, and will be reviewed on individual merit. However, what is essential is that you have all of the information available (CT return being a key one) and that you take immediate steps to make some (ideally all) payments for your expected liability and bring your CT record up to date (i.e. a new more proactive accountant).

Unfortunately, the fact that your 2019/20 return is also late is not going to help you here. However, make sure you try and address that year as part of the overall appeals process.

Above all else... use this as a learning curve. You are responsible for ensuring accounts and returns are prepared and filed on time (and, despite the reasons, it looks like you have failed twice). You are also responsible for paying the taxes you owe. If you haven't paid (which has been asked to you on numerous occassions but has gone unanswered), you MUST know you haven't paid and you MUST know you needed to. You shouldn't rely on anyone to tell you that tax is due - just how much!

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By DKB-Sheffield
24th Aug 2021 17:59

Dear Adam

Just to add to this thread, your other current thread explains that you moved into your current home in March 2021. Is this perhaps linked?

This may explain the reason for not receiving any notification from HMRC previously - and may be quite a glaring omission from your OP!

If your registered address and home address are one in the same, any delay or lack of communication is likely to be related. Additionally, HMRC are unlikely to accept the change of address (and loss of communication) as a mitigating factor if you were not prompt in providing your new details.

If your change of home address is irrelevant, and if you have not changed you registered address in the last 12 months, please ignore my post!

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