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HMRC internal manual

Self Assessment Manual

Appeals, postponements and reviews: appeals: late filing and payment penalties for tax years 2010-11 onwards (Action Guide)

For the tax years 2010-11 onwards, late filing penalties will no longer be capped whether there is tax due or not.

To deal with an appeal against a late filing penalty consider steps 1 - 6 below.

The guide is presented as follows

  Step 1
  Steps 2 - 4
  Step 5
  Step 6

Initial action in all cases

1. Consider the appeal on the grounds of reasonable excuse at SAM10090. If the appeal satisfies the conditions
  * Treat as an appeal, following the guidance for ‘How to cancel penalties’ at SAM61200 onwards and ‘How to settle an appeal’ at SAM10160 

Appeals against any Self Assessment penalty and Reasonable Excuse does not apply: Consideration of Special Reduction

2. Where Special Reduction does not apply
  * Record the reason for your decision in SA Notes and go to step 6
3. Where Special Reduction does apply
  * Follow the guidance for ‘Casework and Litigation Queries’(HMRC Website) and, using the form TAA1, submit the claim to TAA, Direct Tax Technical queries CenPOL TaxAdminAdvice)
  Note: In these circumstances, as long as the submission form is completed correctly with the required information and the reason(s) why special reduction may be appropriate, the form can be authorised by Band O or above, as opposed to SO or above
  * Informally standover the penalty
  * Make an SA Note that the case has been referred to TAA
  * BF for 45 days
4. If a response is not received within 45 days
  * Send a follow up reminder to TAA and BF for 20 days
  When a response is received from TAA
  * If Special Reduction applies go to step 5
  * If Special Reduction does not apply go to step 6

Special Reduction applies

5. To apply the Special Reduction authorised by TAA, follow the actions below
  Note: The application of Special Reduction may not always result in the full cancellation of a penalty. For penalties other than daily penalties, the original penalty must be cancelled and a miscellaneous penalty raised for the amount that remains chargeable
    ### Daily penalties
    Follow the guidance for ‘Reducing a daily penalty Action Guide’ at SAM61232 
    ### For other penalties follow the guidance below
    To cancel the penalty
    * Use function VIEW/CANCEL PENALTIES to cancel the late penalty using the cancellation code ‘5 - other’
    For more information regarding how to cancel a penalty, see SAM61260 onwards
    To raise a miscellaneous penalty
    * In the ‘Year ending 5 April’ field, enter the year that the penalty relates to
    * In the ‘Charge Due Date’ field, enter the original due date of the penalty
    * Show the charge type as ‘Manually Raised Miscellaneous Penalty’
    * In the ‘IT’ field, enter the amount of reduced penalty. Do not make any other entries in the NIC or CGT fields
    Note: Follow the guidance at SAM10160 onwards for guidance on how to settle an appeal
    * Issue OCA/SEES letter SA633 suitable adapted
    * Make an SA Note of the action taken

Special Reduction does not apply

6. If the customer requested a review under Special Reduction
  * Issue OCA/SEES letter SA633 including the appropriate Special Reduction text
  * Make an SA Note that a review was requested and that Special Reduction was considered but that it does not apply
  If the customer did not ask for a review under Special Reduction, consider whether special circumstances have been reported
  If so
  * Follow steps 3 - 5 as appropriate
  If not
  * Issue SEES letter SA633 omitting the optional Special Reduction text
  * Make an SA note to say that Special Reduction was considered but did not apply
  Note: Where the customer has accepted the offer of a review, Appeal Review Unit (ARU), Nottingham will request the BF papers in due course.