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HMRC internal manual

Debt Management and Banking Manual

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HM Revenue & Customs
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Debt and return pursuit: Self Assessment: revenue determinations: introduction

General
Time limits for raising a Revenue Determination
Requesting a Revenue Determination
Automatic actions by the SA and IDMS computer systems
How to view a Revenue Determination
Notify taxpayer
Pursuit and enforcement
Payments on account
Claim to reduce payments on accounts
Right of appeal
Time limits for a return to supersede a Revenue Determination
Determinations and penalties 
Legislation

General

An SA taxpayer is required to file a return by the filing date. When a taxpayer fails to meet this obligation HMRC has the power to raise a Revenue Determination of the estimated liability due and unpaid.

The purpose of a Revenue Determination is to encourage the taxpayer to file the return by raising a charge (Revenue Determination) on the taxpayer’s record sufficient to prompt the taxpayer to file the return and pay what is due and/or to contact us for help.

Debt Management manage the determination process and previously used SA into IDMS (Integrated Debt Management System) to mirror-automate the calculation and input process where possible, subject to certain conditions, criteria and signals.

  • IDMS calculated and made bulk determination requests to the SA computer system and this option was used from January 2006 to the 2009 calendar year.
  • It was also possible to prompt IDMS to automatically calculate and request the determination on a case-by-case basis until 2014.

However, we no longer use the automatic capabilities because both Debt Management and Compliance campaigns have a preference for flexibility in the pursuit of non-filers (This content has been withheld because of exemptions in the Freedom of Information Act 2000) , and latterly, were unable to support the automatic infrastructure required by the computer systems.

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

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Time limits for raising a Revenue Determination

Since 1 April 2010 determinations can only be raised within three years from the filing date of the return.

Prior to that, determinations could be raised within five years from the filing date.

SA is not able to identify and reject determination requests made outside the time limits and care should be taken not to raise a determination outside this time limit, as the determined amount will be invalid and illegal to pursue.

For advice on how to cancel determinations raised outside the time limit please email (This content has been withheld because of exemptions in the Freedom of Information Act 2000) with a subject title of ‘Determination raised in error for an out of date year’.

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Requesting a Revenue Determination

When a case is presented for clerical review you should consider whether to proceed with a determination; if so, use the IDMS system.

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

Care should be taken to ensure the determination figure requested is for the amount intended. However, there is a window of opportunity to cancel the determination figure on the same day the figure you want to amend was input into IDMS.

For advice on how to proceed with determinations amount errors where the window of opportunity has passed, please email (This content has been withheld because of exemptions in the Freedom of Information Act 2000) with a subject title of ‘Determination amount error’.

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Automatic actions by the SA and IDMS computer systems

An automatic Action History note will be posted on IDMS to show that a determination has been requested against each appropriate return work item, and IDMS sends the request over to SA (if the overnight ‘update’ runs to schedule).

The SA computer system will raise the determinations plus any payments on account (POAs) for the following year before an automatic SA note is made showing the request came from IDMS together with the return years. SA then notifies IDMS of the new charges, where these are overdue and unpaid.

Raising a Revenue Determination will not clear the IDMS return work item, but will create further work items for the amount of the Revenue Determination and any POAs.

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How to view a Revenue Determination

To view a Revenue Determination after it has been created on SA use SA function VIEW REVENUE DETERMINATION, accessed from SA function MAINTAIN RETURN SUMMARY.

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Notify taxpayer

Once a Revenue Determination charge has been added to the taxpayer’s SA record a notice form SA323 ‘Determination of tax due’ will be automatically issued to the taxpayer, and a copy will be issued to their agent where the 64-8 signal is present on the record at that time.

Also where a Revenue Determination is raised it will automatically set the level of any POA’s for the following year.

The taxpayer statement will show the amount of the Revenue Determination less any POA’s already paid for that year. A statement is not a pre requisite to enforcement and there is no requirement to wait until the next statement is issued before pre-enforcement activity, such as a letter or a phone call.

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Pursuit and enforcement

Once a Revenue Determination has been raised the taxpayer may be contacted to pursue the debt and return, either by phone or by letter, and there is no period of time we must allow before pursuit.

IDMS used to automatically BF the determination work item 21 days so that the case is not picked up for an immediate letter or clerical review; this was to allow the taxpayer time to reply.

The taxpayer must be given 30 days in which to file the return before enforcement action is taken, such as listing or removing assets (Taking Control of Goods) or attending a county court hearing. Allowing the taxpayer 30 days to send in the return is DM policy; however, this is not a legislative requirement.

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Payments on account

From 6 April 2009 the minimum liability to create payments on account (POA) for the following year increased from £500 to £1,000. The figure of £1,000 first applied to POAs set up following the processing of 2008-09 returns in the tax year 2009-10, and affected the POAs due 31 January and 31 July 2010 and subsequent years.

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

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Claim to reduce payments on accounts

If a claim to adjust payments on account has previously reduced the POAs, these will be restored when a determination is made for the same year.

A claim to reduce POAs cannot be made against a determination. However a claim to reduce can be made against the POAs created for the following year if the return for that year is not overdue.

Where you are pursuing a return for a year where the previous year is subject to a claim to reduce payments on account, the determination figure is based on the previous year’s original charge prior to the claim to reduce. A suitable percentage increase to the original figure should be added, only where appropriate.

Where the Revenue Determination and any overdue POAs remains unpaid, interest and late-payment penalties will be added to the taxpayer’s record.

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Right of appeal

There is no right of appeal against a Revenue Determination. But submission of the return within the time limits allowed will supersede the Revenue Determination and the determined amount of tax will be automatically amended to the amount shown on the return.

Any related interest, late-payment penalties and payments on account will also be automatically amended.

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Time limits for a return to supersede a Revenue Determination

On 1 April 2010, legislation changed the time limit to accept a self-assessment return to replace a determination from five years to three years from the filing date of the return, or within 12 months from the date of the determination, whichever is the later.

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

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Determinations and late-filing penalties

The raising of penalties and determinations are independent from each other.

New style penalties were introduced for 2010-11 and onwards. Preferably, the one-day, three-month and six-months penalties should be raised before a determination although this is not a legal requirement, (This content has been withheld because of exemptions in the Freedom of Information Act 2000) so there is no need to hold-up critical enforcement or bankruptcy actions on this account.

For the 2009-10 tax years and prior the preference was only for the first automatic penalty to have been raised before the determination, but this was never a legal requirement.

Note: It was possible for both a Revenue Determination and S93 (3) Daily Penalties and Continuing Daily Penalties to be applied to the same taxpayer for the same year; for example, when the determination was paid or a determination wasn’t suitable and the return remained outstanding.

Legislation

The legislation that covers Revenue Determinations is in Sections 28C TMA 1970 (see DMBM450120).