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HMRC internal manual

Compliance Handbook

From
HM Revenue & Customs
Updated
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Charging penalties: introduction: penalties for failure to file returns on time - FA09/Sch55: making determinations

If you receive a case where a return is more than 12 months overdue and you have third party information (TPI) that indicates a tax liability or liability to make payments that is significantly above the person’s normal pattern, you should consider asking DMB to make a determination. The determination should be based on the person’s tax liability for the previous year. Do not include any capital gains indicated by the TPI.

The determination is intended to

  • remind the person that the return is outstanding and
  • help HMRC

    • collect the tax in the most efficient way and
    • consider penalties where there are indications of deliberate withholding of information.

Wait at least 30 days before you contact the person.

If the return is filed within 30 days of the determination and shows the identified liability, it is unlikely that you will be able to successfully establish deliberate withholding of information and no further action should be taken.

If the return is filed within 30 days of the determination and does not show the identified liability, you should open an enquiry into the potential inaccuracy.

If a return has not been filed by the time you start your compliance check, and you find a liability in excess of the determination amount, the person’s failure to file the return after receiving the determination that underestimated their tax/payment liability is not in itself evidence of deliberate withholding of information. However, it will give you the opportunity to ask the person why they did not tell us the determination was too low. The answer may help you establish deliberate withholding of information.

If there is not enough evidence of deliberately withholding information, but the person failed to notify an under-assessment, they will be liable to a penalty under FA07/Sch24/Para2, see CH81090.