penalty just received for late 20123 + 2014 SATR

is it too late?

Didn't find your answer?

My client has just forwarded a letter from HMRC debt management dated 15/11/19 chasing c£250 as follows: 2012/13 late filing £100 + interest, 2013/14 late filing £100 + interest, 2015/16 £25 tax + interest.

I was engaged in June 2015. Both the 2013 + 2014 SATRs were submitted on 20/01/16

Is there anything that can be done about the late filing penalties, with respect to timelines?

Thanks

Replies (21)

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By SXGuy
21st Nov 2019 10:07

"I was engaged in June 2015. Both the 2013 + 2014 SATRs were submitted on 20/01/16"

What exactly would you like to do about it? considering that 2013 should have been filed by Jan 14, and 2014 by Jan 15?

If im honest, you client got off lightly, considering its only £100 plus interest for each year, when it could have been over £1000 each?

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Replying to SXGuy:
ALISK
By atleastisoundknowledgable...
21st Nov 2019 13:36

I was just wondering whether a time limit for issues penalties had elapsed.

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Replying to atleastisoundknowledgable...:
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By SXGuy
21st Nov 2019 15:19

But it wasn't a penalty notice. It was a letter from debt management. You need to establish when the penalty notice was first sent. Which will be hard as I can bet client will plead ignorance.

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Replying to SXGuy:
By Paul D Utherone
21st Nov 2019 16:51

...in which case, was it issued?

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Replying to Paul D Utherone:
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By SXGuy
22nd Nov 2019 06:07

Are you asking me or the op?

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Replying to Desert Orchid:
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By SXGuy
21st Nov 2019 15:18

Op said it was a letter from debt management. That's not the same as a penalty notice which may have been issued on time.

Op needs to find out when the original notice was first sent. Which I can imagine client will claim never received.

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Replying to Desert Orchid:
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By richard thomas
21st Nov 2019 15:34

I am not sure where you get the idea that there is a 12 month from the due date time limit for assessing a penalty for failure to file. Para 19 Sch 55 FA 2009 is what lays down the relevant time limit: it is the later of:

Date A: 24 months from the filing date
Date B: 12 months from the date the tax liability in the return is ascertained.

In the case of income tax the liability will be ascertained when the return is filed because that is when the self-assessment is communicated to HMRC.

Date A is therefore 31 1 2016 for 2013-14 (IF the notice to file pre-dated 1 November 2014). Date B is 20 1 2018, so any assessment after that date is out of time.

Whether the penalty assessments were out of time is something that cannot be determined on the facts given by the OP, because they do not tell us when the penalties were assessed. Penalties are not assessed by Debt Management letter, so they may have been assessed in time with the client ignoring the assessments. It all depends on the facts, of which we have few. It seems very odd however for HMRC to be assessing a £100 penalty relating to a failure to file which was rectified in early 2016.

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Replying to richard thomas:
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By richard thomas
21st Nov 2019 15:37

Last sentence should have read "It seems very odd however for HMRC JUST NOW to be assessing ..."

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Replying to richard thomas:
Psycho
By Wilson Philips
22nd Nov 2019 15:01

richard thomas wrote:

Date A is therefore 31 1 2016 for 2013-14 (IF the notice to file pre-dated 1 November 2014). Date B is 20 1 2018, so any assessment after that date is out of time.


Surely Date B is 20/01/2017 (12 months after the date of submission)?
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Replying to Wilson Philips:
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By richard thomas
22nd Nov 2019 15:14

Mea culpa - you are quite right.

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Replying to Desert Orchid:
By Ruddles
22nd Nov 2019 13:27

Sometimes it is better to remain silent and let others think you a fool than to speak up and remove all doubt.

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Replying to Desert Orchid:
By Ruddles
22nd Nov 2019 16:25

The point, as made by others, is that Debt Management do not issue penalties.

Although a further point is that the 12 months runs not from the filing deadline but from another date.

If you are going to cite HMRC (or other) literature it is good practice to provide the actual citation.

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ALISK
By atleastisoundknowledgable...
21st Nov 2019 17:03

I've asked the client re any penalty notice, but strongly suspect that he'll say he's not seen it. Not the most organised of guys.

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By whitevanman
21st Nov 2019 17:53

I think what may be causing some confusion is that these penalties are (were), usually, issued automatically by the computer system (oh dear, do I hear another appeal coming?) but only in the period of one calendar year following the filing date. So, for a 2014/15 return due on
31 /1/16 but not filed on time, the system would send automatic penalties during the year to 31/1/17. Once that date arrives (arrived) it would no longer send penalties for 14/15 as it would then deal with 15/16. I think they were improving(?) the system to allow it to cover 4 years but not sure if they ever got there.
The fact that debt management are now pursuing the debt suggests the penalties were issued some time ago and were either not appealed or any appeal has been settled (because, clearly the debt is showing as due and payable). I am not surprised action is being taken only now because the amount involved is unlikely to make this one of the more pressing debts (from their point of view).

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By pauljohnston
22nd Nov 2019 08:24

So as I see it and I concur with others here the penalty notice is issued on receipt of the return. Client has ignored it and may now be out of time to appeal against the penalty in any case - I believe it is 28 days from issue.

Recommend client pay up now and dont forget to bill for the extra work even if only a nominal amount. Nobody values anything that is free

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Replying to pauljohnston:
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By richard thomas
22nd Nov 2019 13:19

No, you are wrong about when the penalty assessment is issued (generally at least), and no one has said that they are issued on receipt of a return. I speak as someone who has had to decide literally hundreds of appeals against penalties for failure to file returns on time and has therefore had to read hundreds of bundles of documents prepared by HMRC which always include a "View Penalties" screenshot and many other documents including an "SA Statement" and "SA Notes" which show what HMRC has done and when.

Automatic penalty assessments are the norm in a case where each year notices to file are issued in the year following the tax year in question. The computer is programmed with an algorithm that is run first in early February and which compares the record of the issue of the notice to file with any record of receipt of the return, and if no return is shown a penalty of £100 is automatically issued in mid-February.

The same algorithm is run in August when it picks up 3 month and 6 month penalties and issues them in mid-August. The same algorithm is also run in the following February when it picks up 12 month penalty cases and issues the penalty.

It is my recollection (which may be faulty) that the 12 month penalties are issued after or at the same time as the £100 penalty for the following year, so whitevanman may not be correct about the computer only being able to handle one year at a time in this general case of the annual cycle of notices to file and due dates.

Where returns are received after the issue of the £100 penalty and after the 3 month trigger date has passed, a penalty assessment will be issued on receipt of the return, the amount of which will depend on how many days there were after the 3 month trigger date before the return was filed (see para 4 Sch 55 FA 2009). The penalty may be anything between £10 (1 day late) and £900 (90 days late). But apart from this case of a return received in this 90 day period, receipt of a return will not cause a penalty assessment to be issued in the normal case. The 6 and 12 month penalties will have been issued because the return had not been filed and a return received after the 12 month point will not generate a penalty.

The only time I have ever seen a time limit issue arise in the course of the normal cycle is where, after the initial penalty was issued, the assessment was returned DLO and that triggered an inhibition on issuing further assessments or indeed any notices until a new address was on the file. Once there was a new address further late filing penalty assessments were issued, but I held that as Date B had passed they were invalid.

The skimpy facts here suggest to me that this was not a case in the normal cycle, ie the notice to file was not issued soon after each of the tax years in question. I think this because if they had been, the taxpayer would have been liable to penalties of £2,900 (£1,600 for 2012-13 and £1,300 for 2013-14 as they are in time to avoid the 12 month penalty). It is highly unlikely that they paid £2,700 and not 2 x £100, so it is more likely than not that there was a notice to file for both years issued at the same time in the second half of 2015 with the same three month deadline, that the taxpayer failed to file within that period and that, having got the penalty assessments, they promptly filed to avoid more penalties.

This is certainly a scenario I have seen more than once, and there is no difficulty with the computer about issuing more than one year's penalties at the same time.

What I have recounted above does not apply in exactly the same way where paper returns are received. Where a paper return is received after 31 October in the tax year after the one in question but before 1 February in the succeeding year the computer is programmed to issue the £100 penalty on receipt and logging of the return. In other cases where a paper return is eventually made before 1 November in that succeeding next year, the 3 month and 6 month penalties will have been issued automatically in August and will of course be correct. If a paper return is filed between 1 November in the succeeding year and the following 1 February, a 12 month penalty will be issued on receipt of the return.

In the scenario I have assumed the question of whether the returns were paper or electronic is irrelevant, as the three month time limit where the notice to file is issued late applies to both types equally.

Bottom line here is that my scenario means that the penalty assessments were not out of time under para 19 Sch 55 FA 2009. It also means of course that it is far too late to appeal, and I cannot see any Tribunal judge allowing a late appeal.

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Replying to richard thomas:
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By whitevanman
22nd Nov 2019 13:57

I readily accept that I may have been wrong about the HMRC system capabilities. I said as much in my post. I have not dealt with late filing penalties for many years now and I made the comments as a possible explanation for the confusion that may have caused one responder to refer to a 12 month time limit. I think it was around 2010/11 when HMRC were looking to extend their system (it is commented on in their guidance).
That said, it is peculiar that the OP was appointed in June 2015 and the late returns filed Jan 2016 but the OP was, apparently, unaware of penalties (and no apparent pursuit by HMRC) till November 2019.
Also agree with you about amounts, which suggests the returns / notices to file, were themselves issued late. That said, I believe that in such cases the hmrc system may again struggle to do everything automatically.
Also, given that the OP was appointed 6 months before the returns were filed and only £100 penalties appear to be in point, I should have thought everything would have happened since June 2015 and should therefore be within the OPs knowledge (though apparently not so). Lots of questions!
The most important point seems to be that the penalties should have been issued some time ago and at the latest, around the time the returns were submitted. So, it is now far too late to appeal and in all the circumstances, paying up and looking happy may be the best course of action!

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Replying to whitevanman:
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By richard thomas
22nd Nov 2019 14:10

Sorry for not appreciating the qualifications on what you were saying. And you have now mentioned something I overlooked, that the OP was appointed in June 2015. I agree it seems odd that the OP was not aware of what should have happened in my scenario in the second and half of 2015, but I would think it more likely that was the fault of the client rather than that my supposed scenario is seriously out.

Where in HMRC's guidance does it refer to 12 months? (Not that this affects the law of course, just the computer's capacity at the time).

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Replying to richard thomas:
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By whitevanman
22nd Nov 2019 14:22

Not a problem. As I said, there are rather a lot of odd facets and your scenario is certainly the best to explain some of these.
If a notice to file was issued before June 2015 and the returns filed in Jan 2016, one would expect the penalties to be greater than £100. Hence, it seems likely this all happened on the OP's watch. Assuming a 64-8 was filed, he should have received copies of penalty notices etc but seems not to have. So, possibly no 64-8 and it is the client's fault.
As to the system, the comments are in the SAM (I think) dealing with penalties for 2010/11 onwards. I will see if I can get a more accurate ref for you.

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Replying to whitevanman:
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By whitevanman
22nd Nov 2019 19:28

Richard Thomas
Sorry for the delay in getting back. See SAM 61220 as an example where the HMRC system development is referred to.

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By Justin Bryant
25th Nov 2019 11:30

Wow, I have just worked out this is the great RT commenting above.

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