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HMRC internal manual

Self Assessment Manual

From
HM Revenue & Customs
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Returns: trust returns: repairing returns after 31 December: trusts

Late payment penalties are imposed for tax years 2010-2011 and later, under Schedule 56 Finance Act 2009, in addition to interest on tax and Class 4 NIC paid late to encourage prompt payment. For years 2009-2010 and earlier, surcharge was imposed under Section 59C (1) TMA 1970. Late payment penalties apply to any amount outstanding 30 days after the due date for payment. Surcharge is applied to any amounts outstanding 28 days after the due date of payment. For a balancing payment the due date for payment is normally 31 January following the end of the return year or 3 months and 7 days from the date of issue of the return where issued after 31 October.

If a repair(s) to the return is necessary during processing and the repair increases the liability, the due date for payment of the additional tax arising from the repair is the later of the original due date or 30 days from the date the trustee is issued with the printout from TSS advising him of the revision (repair).

Late payment penalties are due on the additional tax arising from the repair 30 days after the statutory due date (for tax years 2009-2010 and earlier, surcharge is due on the additional tax arising from the repair 28 days after the statutory due date). The statutory due date is either 30 days after the calculation is received by the trustee or the balancing payment due date, whichever is the later.

Further guidance regarding relevant dates for interest purposes is available in ‘Amending The Relevant Date’ (SAM60050). Further guidance regarding surcharge and the effects of amending the relevant date for interest’ can be found at SAM62030 and late payment penalty and the effects of amending the relevant due date at SAM61350.

If you are processing returns after the 31 December following the end of the return year special attention should be given to cases where a repair is necessary which would increase the trust’s liability (This content has been withheld because of exemptions in the Freedom of Information Act 2000) and no repayment is due. The amount of late payment penalty/surcharge will be incorrect if the return is processed normally.

If the repair decreases the liability or where the repair will result in a reduced overpayment due no special action is required and the return can be processed as normal.

The computer cannot work out the amount of additional liability attributable to the repair(s) and will only hold one due and payable date for the total liability. Therefore, if the return is processed normally after 31 December and repairs made which increase the liability (This content has been withheld because of exemptions in the Freedom of Information Act 2000) , late payment penalty (surcharge for tax years 2009-2010 and earlier) will be applied to any amount outstanding from the total liability, 30 days from the original due date, and not be applied separately to any amount outstanding from the additional liability attributable to a repair(s). (For tax years 2009-2010 and earlier, surcharge would be applied 28 days from the original due date.)

After 31 December where a repair to the return would increase the liability (This content has been withheld because of exemptions in the Freedom of Information Act 2000) and no repayment is due

  • Use TSS to enter the return details and to record the liability before the repair is made. (If the trustee’s version resulted in an overpayment, and the repair will result in a liability (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) , set the No Repayment signal when processing the trustee’s version. The signal should then be removed when processing the repaired version)

And then

  • Use the same function again, on the following day, to amend the liability to the amount due after the repair

Note: The charge is passed automatically from TSS to SA.

This course of action will ensure that late payment penalty (for tax years 2009-2010 and earlier, surcharge) is applied to any amount outstanding from the additional liability after the due date for the additional tax due caused by the repair(s) at the correct date.

Example

2013-14 trust return is being processed in TSS on 22 January 2015.

Repairs are identified that would increase the trustee’s liability from £1,500.00 to £2,600.00. No repayment is due.

The return was issued in April 2014 and the balancing payment due date is 31 January 2015.

If the repairs are made, and the corrected liability entered in function CREATE RETURN CHARGE in the first instance, a late payment penalty will be applied incorrectly to any amount of the £2,600.00 outstanding 30 days after 31 January 2015.

If the return is processed without repairs on the 22 January and function CREATE RETURN CHARGE is then used for a second time to enter the repaired amounts, late payment penalty will be correctly applied to

  • Any amount unpaid from the £1500.00 outstanding, 30 days after 31 January 2015

And

  • Any amount unpaid from the additional £1,100.00 arising from the repair, 30 days after the due date for the additional amount (30 days from the date the trustee is issued with the printout from TSS advising him of the revision (repair))