Appeals and reviews: end of year penalty appeals: reasonable excuse
The following examples are a guide to, but not an exhaustive list, of circumstances, which might amount to a reasonable excuse
- The employer is a sole trader, or director of a ‘one man’ company, and has suffered a sudden and serious illness between the end of the tax year and the filing date, or has been affected by a prolonged and serious illness throughout the period
- Unavoidable and unexpected absence close to the filing date because of business commitments or domestic emergencies
- Accidental destruction of the records through fire or flood
- Exceptional postal delays because of a strike by postal workers
- Although the employers annual return has not been received from the employer, the employer claims nevertheless to have posted it in good time
- Unless there is evidence to the contrary, accept such a claim on the first occasion made, provided a further P35 / CIS36 and so on is then submitted promptly. In any subsequent year the employer / contractor should be required to substantiate such a claim by evidence of posting of some kind
- Sudden disruption to a business or its records by a break in
- Installation of a new computer system or program for the payroll which has hit unexpected teething problems
- Although the employer’s annual return made is on a photocopy P35, the photocopy is an identical copy of an official form and the return bears the signature in ink of the relevant person
For 2004-2005 only
For 2004-2005 only, there are two additional grounds of appeal that can be considered. It is unlikely that the employer / contractor will be aware of them and you will need to react to assertions that a return was submitted before the due date.
The two scenarios are
A return is still being worked in CEPT and it has not yet been processed
Note: The following guidance is under review and will be updated in due course.
There are still a number of returns with errors held in CEPT. The incorrect data on these returns meant that they could not get into our IT systems. CEPT are reworking the return data to permit it to be processed onto EBS, ECS and our other backend systems.
If an employer or contractor insists that a return was submitted before the due date, you will need to check this using EBS Function VIEW EOY RETURNS HISTORY and the Tracking Tool to establish the date(s) that every return was received from the employer / contractor.
If you are unable to find details of the return the employer / contractor says has been submitted
- Acknowledge the appeal
- Tell the employer or contractor that it is not currently possible to check the return has been received
- Stand over the penalty charge
- BF the case until all 2004-05 returns have been processed
- We will tell you later when all 2004-05 returns have been processed and how to handle appeals when the return remains outstanding after this date
Our records do not show the correct date on which the original return was received
If an employer / contractor has submitted two or more returns for 2004-05 it is possible that they may have been processed out of order. The first return processed will be treated as the first return received but because of the staged introduction of ERIC in 2004-05 it is possible that returns may have been processed out of order.
To check this use EBS Function VIEW EOY RETURNS HISTORY and the Tracking Tool to establish the date(s) that every return was received from the employer / contractor.
If at least one return was received before the due date of 19 May 2005 (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
- Settle the appeal by agreement under Section 54 Taxes Management Act 1970
- Reduce the penalty to nil
If all returns were received after the due date of 19 May 2005 (This content has been withheld because of exemptions in the Freedom of Information Act 2000) , there are no valid grounds of appeal and the penalty should stand. You should ask the employer or contractor to withdraw the appeal. If the employer or contractor declines to withdraw the appeal, you will need to follow the guidance in the Appeals, Reviews and Tribunals Guidance (ARTG)