Q: If you have submitted two late tax returns (by three weeks in each case) and believe you have a legitimate reason, is there an appeal process for the charges incurred?
Dec 12 2007
Answered by: Clive Lewis Ask a question
Automatic late filing penalties (under S93(2) and (4) Taxes Management Act 1970), cannot exceed the tax liability for the year. So in cases in which the tax due is less than £100 (or £200 as appropriate), the SA computer system will automatically reduce (cap) the penalty to the amount shown in Box 18.3 of the Return.
In addition the penalty should be capped where the amount shown in Box 18.3, less any amounts paid at the filing date is less than the penalty. Up until now this has had to be done clerically and in cases where this was missed, it led to unnecessary appeals and complaints.
Now, the computer system automatically caps the penalties to the amount in Box 18.3 less any amounts paid on or before the statutory filing date.
You should remember that HMRC won't know to cap a penalty until they have processed the Return and established the liability for the year. However, if the penalty is issued after a late Return has been processed the Penalty Notice will reflect the capped amount, even if this is nil. If the amount of tax and Class 4 National Insurance Contributions payable is later increased, the penalty will also increase and interest will be charged
Appeals
Notice of appeals must be given in writing to the HMRC officer concerned specifying the grounds of the appeal usually within 30 days after the issue of the assessment.
Common examples of where the Revenue might regard as reasonable are:
a) where they are satisfied the taxpayer did not receive the return
b) where the return was posted in good time but held by unforeseen disruption to the postal service
c) where the taxpapyers record were lost through fire, flood or theft and could not be replaced in time to meet the deadline
d) where serious illness immediately before the filling date made timeous submission impossible
e) the death of close relative or domestic partner shortly before the deadline (provided all necessary steps to meet the dealine had been taken).
Proof will be required by the Commissioners to support the grounds of any appeal.
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