Partnership Tax Return Late Filing Penalty Appeal

Partnership Tax Return Late Filing Penalty Appeal

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I filed a paper partnership tax return on 5 November, and one for another partnership on 15 December, whilst using HMRC’s online filing system to file the self-assessment tax returns for the partners. The two partners of one partnership paid their tax bills in full prior to 31 January 2011. The other partnership, which ceased trading last March, received a tax rebate due to a trading loss.

 
HMRC have just issued a Notice of determination of penalty for a late partnership tax return for year ended 5.4.2010 to both partnerships (letters are dated 15 February, but received on 26 February). 
I now learn to my chagrin that the rule for late partnership tax returns is not the same as for individual returns (regarding so long as the tax is paid in full by 31 January, or no tax is due, then no £100 penalty is imposed for submitting a paper tax return after 31 October).
 
In the past I have submitted these paper partnership returns well in time, but extenuating personal circumstances delayed them last year, including bereavement and illnesses. I cannot blame my clients for the delay, and want to appeal the potential £400 cost to me! I have only a few clients, so do not have tax return software, and now work part-time.
 
Has anyone experience of a successful partnership appeal for similar circumstances? What would be the best way to go about appealing?
 
If I write a letter of appeal on my letterhead, should I:
 
- deal with both businesses in the same letter from me,
- write separate letters for each business, or
- write four letters, one on behalf of each partner?
 
Should I attach a cheque for £400 from me with the letter(s), or send no payment and await the response to my appeal(s)? One of the partners is concerned about receiving a demand saying she is responsible for paying the £100 penalty charge.
 
Many thanks for any help and advice, as I have never had a problem with HMRC before. I’m very apologetic to my clients, as I have always tried to do a good job for them.
 
 

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Euan's picture
By Euan MacLennan
10th Mar 2011 10:58

I would not be too hopeful

The basic facts are against you.  If a partnership tax return is filed late, each partner is charged a penalty of £100, regardless of whether there is any tax liability or if any tax liability has been paid by the partners.  Paper returns are due by 31st October, online returns by 31st January.  By now, you are in a Catch 22 situation - if the penalties are not paid, either by you or the individual partners, HMRC will continue to chase the partners, but if you do pay, HMRC will probably ignore your appeal.

If you really feel that you have valid extenuating circumstances, I would:

appeal immediately with one letter for each partnership, but giving the UTRs for the individual partnerstell the partners in writing that you will pay their penalties (and interest) if push comes to shove, but to stand firm against the pressure from HMRC for them to pay.

 

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