Late Return Automatic Penalties: Determining an Appeal
|CISR65600||Action Guide contents|
All CIS penalty appeals made by contractors will be handled online by the Penalty and Appeal Service, written appeals will be handled by NIC&EO Longbenton, who will work the appeal up to the point where;
- the appeal is accepted in the contractor’s favour, or
- the appeal is withdrawn before an internal review is requested
- the appeal is determined by agreement before an internal review is requested
- the decision maker’s opinion is confirmed and the contractor accepts that decision, or
- an internal review is taken up by the contractor, or, finally
- the contractor notifies the appeal to the tribunal.
The contractor has the right to accept the decision maker’s opinion of their appeal, or to take up the offer of review if they do not agree with the decision maker. Alternatively, they can notify the appeal to the tribunal as long as an appeal has already been made to HMRC and no internal review is already under way.
Role of the Decision Maker
The decision maker is not the person who logs the penalty appeal but is the person who examines the grounds of the appeal being made by the appellant. The decision maker will select the appeal through the Work Management system (PEGA) and attempt to progress the appeal as follows:
Uphold the appeal
The decision maker accepts the grounds of the appeal. It is assumed here that sufficient information has been submitted to enable you to fully consider the appeal.
The penalty should be determined by agreement under TMA70/S54 by using the function ‘Determine Penalty Appeal’. Information on determining an appeal can be found within the Action Guide at CISR65630. Once this function has been completed the system will issue a CIS320 (Appeal Outcome Letter) and send SAFE an instruction to issue an amended penalty charge.
Where the appeal is logged and determined on the same day, only the determination letter will be issued. This is because the system will issue only one letter per scheme per day, containing all decisions made on that day.
Action should also be taken to clear the penalty appeal work item from PEGA.
Penalty appeal received requiring further consideration
If the CIS monthly return has not yet been submitted for which the CIS penalty has been issued, before considering the grounds for appeal you must firstly take action to obtain the outstanding CIS monthly return(s) from the contractor. Once the return(s) have been received you can then go on to consider the grounds for the appeal.
If an appeal cannot be upheld immediately and requires further information before it can be considered, the appellant should be contacted to obtain this information. It is likely that these enquiries will focus on the grounds for the appeal. The allowable grounds are; reasonable excuse, HMRC admin error and ‘other’.
- Reasonable Excuse - Whether a customer has a reasonable excuse depends on the particular circumstances which prevented the completion and submission of the return by the due date, as well as the particular circumstances and abilities of the customer. The test is to consider what a reasonable person, who wanted to meet their tax obligations would have done in the same circumstances and decide if the action of the customer met that standard. See CISR81020 which provides an overview of what can be accepted as a reasonable excuse. The return should also be submitted as soon as possible after the reasonable excuse expired.
- HMRC Admin Error - This might apply where it is established that there has been a failure of the system or a clerical error to process information within the time frame allowed, or the information received has been incorrectly processed. If the appeal has not yet been logged, the penalty should be vacated. See the ‘Vacating a Penalty’ Information Guide at CISR65150. However, once an appeal has been recorded on CISR it cannot be vacated and must therefore be determined under TMA70/S54 instead.
- Other - If the grounds submitted do not fit either reasonable excuse or HMRC admin error’, you should select ‘Other’.
The status of the appeal should be left as ‘Received’ on CISR and any relevant notes made using the ‘Update Penalty Appeal’ function.
In response to your enquiries the appellant may supply information in support of the appeal resulting in an agreement being reached for settlement without the appeal being subject to either an internal review or being heard by the tribunal. The function [Determine Penalty Appeal] should then be used to determine the appeal under TMA70/S54.
Action should also be taken to clear the penalty appeal work item from PEGA.
Appeal not to be upheld
Where you wish to refuse the appeal, the Decision Maker should inform the appellant in writing that HMRC cannot uphold the appeal, together with the reasons for that decision. This is known as the decision letter. The appellant should be offered an internal review of the matter by sending with your letter the ‘request for review of decision’ form to the appellant.
Templates of the decision letter and the ‘request for review of decision’ form are available for your use under ‘Letters and Forms’ within SEES. You will need to install the Employer Compliance and Construction Industry SEES package to be able to access this.
The appellant should be allowed 30 days to take up the offer of an internal review, or to make an appeal direct to the Tribunal Service (This content has been withheld because of exemptions in the Freedom of Information Act 2000) . At the same time the status of the appeal should be updated on the CISR record to ‘Withdrawal invited’ using [Update Penalty Appeal] and make a note using the appeal [Notes] button.
The Decision Maker should, at this stage, clear the penalty appeal work item from PEGA as ‘Complete’, and you will need to use a spreadsheet held centrally at the CIS Centre at Newry in order to monitor the various timeframes for the appellant to ask for an internal review, or to make an appeal direct to the tribunal.
Appellant does not respond to the offer of review
Where the appellant does not take up the offer of review, or does not notify the appeal to the tribunal within the time limit, you may determine the appeal under TMA70/S54 (see ARTG2700). The penalty remains as issued and is due and payable by the contractor at the original due date. At the same time, you should update the status of the appeal on the CISR record to ‘Determined by Agreement’, using [Update Penalty Appeal] and make a note using the appeal [Notes] button.
The system will also check if there are penalties inhibited for the return under consideration and if so present you with a message to check them. It is your responsibility to check the position using the function [Maintain Penalty Inhibition] to decide whether any inhibitions previously set should remain. The appellant must be informed in writing of any inhibitions to be lifted and that at the next penalty date penalties will be issued for all periods where a CIS return was received late or is outstanding.
Role of the Review Officer
Appellant takes up the offer of an internal review
The appellant will notify their take up of an internal review using the request for review form (already pre-addressed for Londonderry) sent to the appellant with the decision letter by the decision maker. The review officer will call for the appeal papers from the decision maker in order to carry out the internal review. They will also consider whether an extension to the 45 day time limit for carrying out an internal review for the case will be required by agreement with the appellant (see ARTG4600).
The review officer will carry out the internal review of the appeal and notify the customer either within the 45 day time limit (or any other extended time limit agreed between the review officer and the appellant) and issue a review conclusion letter setting out the HMRC final view of the matter (see ARTG4800).
A template of the review conclusion letter will be available for your use under ‘Letters and Forms’ within SEES. You will need to install the Employer Compliance and Construction Industry SEES package to be able to access this.
If the review officer is still of the same opinion as the decision maker, the appellant then has the option to notify the appeal to the tribunal within 30 days if they still disagree with the HMRC view of the appeal. Alternatively, they can abandon their appeal in which case 30 days after the issue of the review conclusion letter (This content has been withheld because of exemptions in the Freedom of Information Act 2000) the appeal should be determined under TMA70/S54 TMA 1970 in favour of HMRC (see ARTG2700).
The Reviewing Office will also need to use a monitoring system of all internal reviews requested, so that the timeframes for the review are strictly adhered to, and that action is taken to determine the appeal under TMA70/S54 if the appellant does not reply to the review conclusion letter, or does not notify the appeal to the tribunal.
Note; Having made an appeal to HMRC, the contractor may notify the appeal to the tribunal at any time except during the period where they have taken up the offer of an internal review and until the conclusion of that review.
Role of the Tribunals Caseworker
Appellant notifies an appeal to the tribunal.
If an appellant refuses to accept HMRC’s decision not to uphold the appeal, they can notify the appeal to the tribunal (ARTG8200) within 30 days of the review conclusion or after the appellant has made an appeal to HMRC but within 30 days after the issue of the decision letter where the appellant has not taken up the offer of an internal review.
You will know that an appeal has been notified to the tribunal through the HMRC Clearing House, as they will contact the tribunals caseworker who will be based in one of the Appeal Units who will then call for the penalty appeal papers from the decision maker and the review officer (where there has been an internal review). The action to be taken by the tribunal caseworker is described in detail at ARTG8300. It is envisaged that the majority of penalty appeals will be a paper based tribunal hearings and this process is described at ARTG8370.
At the same time as you are aware that the contractor has notified the appeal to the tribunal the status of the appeal should be updated to ‘Listed for Personal Hearing’ on the CISR record using [Update Penalty Appeal] and making a note using the appeal [Notes] button.
Following the tribunal hearing
The tribunal may then decide that the appeal should be
- upheld and action taken to discharge the penalty
- partially accepted and action taken to amend the penalty
- not Upheld.
The appeal administrator will need to use the function ‘Determine Penalty Appeal’ to record the final appeal status. See the Action Guide at CISR65630 for further information and also CISR65130 which gives advice on the different appeal status options. Once this function has been completed the system will issue a CIS320 (Appeal Outcome Letter) and send SAFE an instruction to issue an amended charge.
You should use the appeal ‘notes’ functionality to record on CISR the progress of the appeal throughout its lifecycle. Where there has been a tribunal hearing, full details of the attendees, and the appeal outcome should be included. Also, at the time the appeal is determined a printout of the notes must be taken and filed with the appeal papers. See CISR65680 for further information.
On determination of an appeal, it is your responsibility to check the position using the function [Maintain Penalty Inhibition] to decide whether any inhibitions previously set should remain. The appellant must be informed in writing of any inhibitions to be lifted, and, that at the next penalty date penalties will be issued for all periods that a return was received late or is outstanding.
Finally, SAFE will issue an amended penalty notice giving a new 30 day appeal period. However, the due and payable date for any due payment will remain as shown on the original penalty notice. If, following determination of the appeal, there is a reduction in the amount of the penalty and the penalty has been paid either partly or in full by the contractor, SAFE will either allocate the amount paid to another outstanding contractor’s monthly penalty or other charge, or where there are no amounts outstanding the amount paid will be repaid by SAFE automatically to the contractor.