One man band plumber..... hasn't done a tax return for the year to 5 April 2009 and HMRC have now raised a Determination of Tax Due for £6,000 - being estimated income tax and class 4 NIC.
Having looked at the plumbers records - I estimate the true amount of tax to be due for the year to be around £15k.
My opinion is he has two options:
1. Submit a tax return showing the true amounts of tax & NIC due prior to 31/01/2013 - being three years after the original filing deadline; or
2. Pay the £6k tax per the determination and after 31/01/2013 HMRC are out of time to amend it.
Does that sound right? Are there any other options?
Thanks in advance!
Replies (3)
Please login or register to join the discussion.
Tax determination & Time limits
The 31/1/2013 deadline is only relevant as where a return is required for 2008/09, HMRC have until 31/1/2013 to raise a determination. This they have done so this date now becomes irrelevant. So, option one is incorrect.
Additionally, the issue (and payment) of a determination does not negate the requirement to file the Return. HMRC will continue to pursue your client's Return by raising additional penalties until the Return is filed whether or not the determination is paid. So, option two is also incorrect.
Your only options are
(a) file the Return as soon as possible and pay the full amount of tax due as soon as possible. Remember interest and at least two 5%surchages will also be due.
(b) not file the return and continue to receive increasingly high penalties (whether or not the determination is paid).
Personally, I would go with (a).
Determinations
Yes, I agree, you have 12 months from the date of issue of the determination to file a correcting self assessment, after which time, if none is filed, the determination will become final.
However, if you know the actual liability should be around £15k, you should be filing a return.
Knowingly accepting an underassessment by HMRC will also expose the client to penalties under Schedule 24 FA 2007 and also raises money-laundering issues. It is not something I would recommend.