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SA estimated tax demand 2002/03. Can anything be done?

SA estimated tax demand 2002/03. Can anything...

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Hello.  I have two (unrelated) clients in almost an identical situation regarding a Self Assessment matter, now more than 6-years old:

During the year ended 5 April 2003, HMRC apparently put the clients on the Self Assessment register and allege that they asked them to complete Returns.  Both clients say they have absolutely no knowledge of this.  The only time they've been made aware of this is 3 weeks ago, when they received HMRC demands to pay tax determinations (allegedly for failing to submit a Return).  Too make matters more odd, HMRC are claiming that both were put on the SA register for one year only (2002-03), during which both clients were PAYE employees, paying the correct tax as is evident by their P60s.  They owe not one penny in tax.

So far, HMRC have written to me saying an appeal cannot be made because it's now out of date.  So, what does that mean?  That the clients are supposed to pay the £5000 or so that's been demanded?  What should I do about this.

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By julian.sims
26th Sep 2012 14:13

Determinations

James

It would appear from your comments that HMRC take the view that the Determinations were made some years ago and within their permitted timescale.  HMRC currently have three years from the normal filing date to raise a determination (in the absence of Return).  The old rules were slightly different, but even so if only raised now, they are clearly out of time

The normal approach with a Determination is that you cannot appeal against it but must submit the outstanding Return to displace the Determination.  Usually you have twelve months from the date of the Determination to submit the Return.

One option open to James and his clients is to submit Returns showing the correct position and ask HMRC to give Special Relief (see http://www.hmrc.gov.uk/briefs/income-tax/brief1711-sacm.pdf), this is the successor to the old relief under Equitable Liability.  I am sure HMRC will take some convincing that the original determination was not received, but their lack of any collection action from over eight years must help.

I can't say, its much easier when you submit the Returns to HMRC to displace the Determination.  I have two cases where 2008 Determinations were raised on clients who had managed to fall behind and the Returns have disappeared into a black hole with no contact details at HMRC for the last three months.

J

 

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By bernard michael
26th Sep 2012 15:24

Ask to see copy HMRC correspondence asking them to complete a SA return on the grounds that the clients say they didn't receive any. Might work

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