Save content
Have you found this content useful? Use the button above to save it to your profile.
Tax return
istock_PaulMaguire_aw

HMRC can use self assessment to force payment

by

The FTT decided HMRC was wrong to force a taxpayer to complete a tax return just to collect a tax underpayment created by PAYE. The Upper Tribunal has now reversed that ruling.    

20th Jan 2020
Save content
Have you found this content useful? Use the button above to save it to your profile.

The initial tax underpayment was brought about by HMRC’s sloppy coding. HMRC issued tax return notices under TMA 1970 s 8(1), and my article in January 2018 explained how David Goldsmith successfully appealed against penalties for late filing of those self assessment tax returns.

HMRC’s appeal against the FTT’s judgment has now been heard by the Upper Tribunal (UT).

Jurisdiction

There is no direct statutory right to appeal against the issue of a TMA 1970 s 8 notice, so the validity of such a notice can only sensibly be challenged at the time of appealing against its consequences, such as penalties.

HMRC asserted that the FTT did not have jurisdiction to consider the validity of the s 8 notices in the course of an appeal against penalties, and any challenge to HMRC’s discretion to issue those s 8 notices could only be done at judicial review.

Register for free to continue reading

It’s 100% free and provides unlimited access to the latest accounting news, advice and insight every day. As well as access to this exclusive article, you can:


Content lock down, tick icon

View all AccountingWEB content


Content lock down, tick icon

Comment on articles


Content lock down, tick icon

Watch our digital shows and more

Access content now

Already have an account?

Replies (6)

Please login or register to join the discussion.

avatar
By KenKLM
21st Jan 2020 12:23

What is laughable is that very often the P800 will state that the underpaid tax will be collected via a coding notice and the taxpayer then (reasonably) assumes he has not got to do anything more . Common sense and a "human" approach to this nonsense is called for in my opinion.

Thanks (1)
avatar
By essex accountant
21st Jan 2020 13:51

I have a client who owes £235 from a P800 from 2015-16. She has ignored demands to pay so HMRC issued tax return notices for 2016-17 and 2017-18 in September 2019 (without me knowing as her agent). The client never told me so I have not completed these tax returns and got penalties. She was on PAYE both years and thought understandably that she didn't need to complete them In 2018-19 she commenced a self employment and I have a tax Return ready to file by January 31st. Under this UT decision the tax returns were correctly issued. HMRC say to file the tax returns and appeal the penalties. HMRC won't withdraw the notice to file these tax returns.

All this for a £250-£300 fee!! What a waste of everyone's time. BTW her annual income as a carer is £20,000. Out of principle I will do this Pro Bono as she can't afford to pay me.

Thanks (1)
Replying to essex accountant:
By SteveHa
21st Jan 2020 16:13

I'd be tempted to try a S8B withdrawal again with an undertaking that the underpayment will be brought into account on the 2019 Return. That should satisfy everyone, and HMRC get their money without the client being unduly penalised.

Thanks (0)
Replying to SteveHa:
avatar
By Not Anonymous
21st Jan 2020 22:38

SteLacca wrote:

I'd be tempted to try a S8B withdrawal again with an undertaking that the underpayment will be brought into account on the 2019 Return. That should satisfy everyone, and HMRC get their money without the client being unduly penalised.

Why do you think it would be brought into account in the 2018:19 return?

Thanks (0)
Replying to essex accountant:
avatar
By Not Anonymous
21st Jan 2020 22:36

essex accountant wrote:

I have a client who owes £235 from a P800 from 2015-16. She has ignored demands to pay so HMRC issued tax return notices for 2016-17 and 2017-18 in September 2019 (without me knowing as her agent). The client never told me so I have not completed these tax returns and got penalties. She was on PAYE both years and thought understandably that she didn't need to complete them In 2018-19 she commenced a self employment and I have a tax Return ready to file by January 31st. Under this UT decision the tax returns were correctly issued. HMRC say to file the tax returns and appeal the penalties. HMRC won't withdraw the notice to file these tax returns.

All this for a £250-£300 fee!! What a waste of everyone's time. BTW her annual income as a carer is £20,000. Out of principle I will do this Pro Bono as she can't afford to pay me.

How would filing returns for 2016/17 or 2017/18 formalise the tax owed for 2015/16 though?

Sure there isn't a 2015/16 return required? Or there is more to this than the client has told you?

I really don't see what purpose the returns for 2016/17 or 2017/18 are serving if the only tax owed is for 2015/16.

Thanks (0)
Replying to Not Anonymous:
avatar
By whitevanman
22nd Jan 2020 13:52

If you read the post from Essex you will see that his/her client's case is similar to that of Goldsmith. There was a 2015/16 underpayment dealt with initially by P800. When the client failed to pay, HMRC issued returns (presumably so they could finalise the debt). I don't see how anyone can complain of this or claim that, in some way, the client is being unfairly treated. I cannot imagine why, in the circumstances, HMRC should be willing to withdraw the notices. My suggestion would be to file the returns and either repay the debt or, if unable to do so, contact HMRC's Debt Management to arrange time to pay. Who knows, they might be able to help!

Edit
Sorry Essex, I misread the main thrust of your post. I agree that if the P800 is for 2015/16 what is required ( to finalise that debt) is one with the 2015/16 income in it. I put it this way because some of us oldies still think if how it used to be when the 2016/17 return would have asked for details of income in the 2015/16 year.
The fact that 16/17 & 17/18 returns have been requested, certainly suggests some other facts (as you say).

Thanks (0)