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HMRC internal manual

Self Assessment Manual

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HM Revenue & Customs
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Appeals, postponements and reviews: appeals: appeal against a late filing penalty

General
Return rejected on or shortly before 31 January
Appeals on the grounds of ‘reasonable excuse’
Appeals against penalties in partnership cases
Appeals against non-capping of fixed automatic penalties

General

This information supplements the guidance given in subject ‘Handling an appeal against a charge based item’ (SAM10060) and covers the specific circumstance where a taxpayer appeals against a late filing penalty on the grounds that

  • There was a reasonable excuse for the late submission of the return

Or

  • The fixed automatic penalty should have been reduced (capped). This only applies for tax years 2009-10 and earlier

The taxpayer has 37 days in which to appeal against a late filing penalty. The statutory appeal period is 30 days but a further 7 days are allowed for printing and despatch of the notice.

Appeals against late filing penalties should be recorded on the taxpayer’s record and the penalty charge informally stoodover.

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Return rejected on or shortly before 31 January

A period of grace is allowed for customers who were unable, due to technical or operational reasons, to file online when filing a return in the following limited circumstances. Where the return is filed by 31 January but is unsatisfactory as a result of a genuine oversight, if the completed return is then re-filed within 21 days of being returned to the taxpayer, the taxpayer is treated as having met his or her obligation to file by the filing date.

The paper return should be logged before being returned. An SA note should be made showing the original date of receipt and the reason why the return was sent back to the customer, and the case put on BF. If the return is re-filed within 21 days, the original date of logging should remain on the record. However if the return is not filed within 21 days the return should be unlogged and the relevant SA note made.

However, if exceptionally the return was sent back to the taxpayer without being logged, the return is subsequently logged as received on the date the completed return is filed. Where this is after 31 January, a late filing fixed penalty may be imposed. Provided the return was re-filed within 21 days of being returned to the taxpayer, an appeal against the penalty should be accepted and the penalty cancelled using function VIEW/CANCEL PENALTIES (for tax years 2009-10 and earlier use function AMEND FIXED PENALTIES).

See the subject ‘Unsatisfactory Returns’ in section ‘Individual Returns’, ‘Partnership Returns’ or ‘Trust Returns’ in the business area ‘Returns’ for more information.

As a general rule, validation of Internet returns is done whilst the taxpayer is still online and they receive a success or error message almost immediately. However, there may be exceptions and any appeal against a resulting penalty should be looked at on its own merits.

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Appeals on the grounds of ‘reasonable excuse’

From April 2012, leaflet SA370 notes will be issued for individuals and SA371 notes for partnerships for tax years 2010-11 onwards.

In law, for tax years 2009-10 and earlier, the penalty is collectible and enforceable whilst the ‘reasonable excuse’ appeal remains open. However in practice the fixed penalty will be informally stoodover immediately the appeal is logged. For tax years 2010-11 onwards, the law does not require the penalty to be paid before the appeal is determined.

In circumstances where the further late filing penalties are due they will be imposed even though the first fixed automatic penalty is informally stoodover.

Most appeals against late filing penalties will be received by the office with processing responsibility for the taxpayer. Some will be received by the office with technical responsibility for the taxpayer. Appeals should be dealt with in the office where they are received except

  • In the circumstances shown in the table at SAM10041
  • In enquiry cases

Or

  • Where the office has no processing or technical functionality, for example Accounts Offices, Debt Management Offices and so on

Where an appeal is received by an office in any of these circumstances, the appeal should be acknowledged and then referred immediately to the office with processing responsibility.

The office dealing with the appeal should consider the appeal critically on the grounds of reasonable excuse see subject ‘Reasonable Excuse’ (SAM10090) and take one of the following actions

  • Allow the appeal
  • Refuse the appeal and offer a review

Or

  • Refer the case to the Interest Review Unit (IRU) in Cumbernauld for advice

Notes:

1. Consideration of an appeal against late filing penalties should be based solely on the existence or otherwise of a reasonable excuse. Resourcing factors and cost-effectiveness are not valid factors in this consideration and must not be taken into account. For further guidance on reasonable excuse, see SAM10090
   
2. Particular care will need to be taken when dealing with an appeal against late filing penalties where the return has still not been filed

 

Where an appeal is received and the return has not been filed

  • Tell the taxpayer that the appeal cannot be dealt with until the return is filed

And

  • Ask the taxpayer to file the return and make a fresh appeal when they have done so.

Important: Where the following type of case is received it should always be referred to the Interest Review Unit regardless of whether the appeal meets the reasonable excuse criteria

  • The taxpayer has appealed against both a late payment penalty and late filing penalty and you think that the reasonable excuse criteria are satisfied for one of these charges but not the other
     

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

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

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Appeals against penalties in partnership cases

In partnership cases all partners will be charged a late filing penalty if the partnership return is not filed by the filing date. Appeals against late filing penalties in partnership cases must be made by the nominated partner, or authorised agent and dealt with through the partnership record.

If you receive an appeal against a penalty on a partnership try to settle it immediately. If you cannot, then

  • Record the appeal on the partnership record. Use the date the penalty was imposed as the charge creation date - to find this you may have to view one of the partner’s records
  • Where possible for each individual partner

    • Informally standover the penalty in full. (It is not necessary to record the appeal on the partner’s record)
    • Note the item which will appear on the ‘Review Informal Standover’ work list ‘Working with Partnership’, the responsible office and UTR

When the appeal is settled

  • Update each individual partners record, where able. Otherwise inform the responsible office for each partner of the outcome
     

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Appeals against non-capping of fixed automatic penalties

For tax years up to and including 2009-10, the SA system will automatically reduce fixed automatic penalties to the correct amount in the majority of cases. Note: For tax years 2010-11 and later, penalties will not be capped.

You may receive an appeal against the non-capping of a fixed automatic penalty for 2009-10, or earlier, in exceptional circumstances. In these cases, the taxpayer record should be examined and where the amount of the fixed automatic penalty is greater than the unpaid liability for the year as at 31 January following the end of the year, the penalty should be reduced to the unpaid amount.

Capping does not apply to penalties charged because of late filing of a partnership return.