Suspended SA Penalties 'Reinstated'

Problem is with SA Surcharge and Penalties from 2006-07 which were shown as 'suspended'

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Payment of these has now been taken from 2016-17 overpayment.  Wrote to HMRC saying out of time but their reply says 'only suspended for it be reviewed if your client ever became in a position to make the payment'.  Obvious difficulties with 10 year timeframe.  Does this sound right please do you think?

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paddle steamer
By DJKL
04th Dec 2018 14:49

There is something about there being no prescriptive period re HMRC debts re interest and tax but not sure if that is just re these or also covers penalties.

https://www.gov.uk/hmrc-internal-manuals/debt-management-and-banking/dmb...

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By Susanner
04th Dec 2018 15:05

Thank you DJKL. I will explore this avenue.

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RLI
By lionofludesch
04th Dec 2018 15:26

Why were they suspended ?

If it was because he was potless, I think you might be on shaky ground.

When were they last shown on an HMRC statement ?

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Red Leader
By Red Leader
04th Dec 2018 15:47

Further to lion's point, penalties are often suspended for a period subject to conditions, and then cancelled if the client has fulfilled those conditions in that specified period.

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Replying to Red Leader:
RLI
By lionofludesch
04th Dec 2018 15:54

Was that in force in 2006 ?

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By Susanner
04th Dec 2018 16:51

These were specifically late filing and late payment penalties, so no conditions set that I know of - but so long ago difficult to tell. Thanks

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By carnmores
04th Dec 2018 18:15

was there not a letter to be signed by client re the original suspension?

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RLI
By lionofludesch
04th Dec 2018 18:25

The point I'm making is that some penalties are waived after an agreed time of "being a good boy", but I don't think this was in force in 2006. I think it only came in around 2010.

I suspect that collection was only suspended because HMRC didn't think it was worth chasing. Now that the taxpayer has a repayment, they're deducting what he should've paid ten years ago.

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Replying to lionofludesch:
paddle steamer
By DJKL
04th Dec 2018 19:36

So the key point is ,are they legally entitled to so deduct?

I know they believe they are re tax and interest (per the link I provided) but their own guidance makes it clear that their never say die re debts does not apply to all debts- catch is their guidance is silent on penalties (or I missed it) so the OP needs someone to dig around in the legislation.

Alternative is chance your arm, quote them their guidance, point out it appears silent on penalties and legally contest their right to deduct the out of time debts.

No idea correct answer here, anyone know chapter and verse re is a penalty a tax? My view is unless legislation expressly so defines it then a penalty is not tax and is not interest.

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paddle steamer
By DJKL
04th Dec 2018 19:44

https://www.legislation.gov.uk/ukpga/2009/10/schedule/55

" Section 18

(3)An assessment of a penalty under any paragraph of this Schedule—

(a)is to be treated for procedural purposes in the same way as an assessment to tax (except in respect of a matter expressly provided for by this Schedule),

(b)may be enforced as if it were an assessment to tax, and

(c)may be combined with an assessment to tax."

It may well be that the reason the HMRC guidance is silent re recovery of penalties is the above in which case the taxpayer may be out of luck.

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Replying to DJKL:
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By Susanner
04th Dec 2018 21:22

Thanks, in particular to DJKL, for all the effort in tracking that down. I am going to have a go anyway - nothing ventured nothing gained.

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