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HMRC internal manual

Self Assessment Manual

Compliance: enquiry work: failure to notify cases where no S9A enquiry

In a failure to notify case you may decide to accept the SA return without opening an enquiry but impose a tax geared penalty in respect of the failure.

The penalty due under S7(8) TMA 1970 is based on the amount of net tax (and Class 4 NIC) due and unpaid at 31 January following the tax year in which the liability arises. This means no penalty will be payable if all the liability is paid in full by that deadline. Where the case is to be concluded by a contract settlement (SAM31060) the penalty is subject to abatement in the normal way.

Any surcharge (and interest on that surcharge) imposed on the liability on which the penalty is based must be cancelled in accordance with S59C(4) TMA 1970. When you cancel a fully paid surcharge, the computer will automatically cancel any interest charge raised on that surcharge.

You should try to conclude the case by negotiating a contract settlement.

If the taxpayer is unwilling to enter into a contract settlement

  • Liability for the relevant year is collected through SA in the normal way

And, after formal penalty action

  • Function CREATE SUNDRY CHARGE is used to enter the tax geared penalty on the taxpayer’s SA record for collection in the normal way

Note: Formal penalty action must not be taken until authority has been obtained from Authorising Officers within CPTT or Local Compliance

If the Failure to Notify signal was set on the SA record, a work item is created on the Mandatory Review Work List on the CQI Workbench. You will need to note a Reason for No Enquiry on the CQI record, if no S9A enquiry is opened. This will remove the work item from the Work List.

There is not a specific place on an SA record to show that a S7 TMA 1970 penalty is being imposed for a tax year that has not been taken up for S9A enquiry. A suitable note should therefore be made in the Free Format Notes in function AMEND TAXPAYER SIGNALS.

Where a S9A enquiry is opened, it is registered on the CQI Workbench and the S7 TMA 1970 failure is dealt with in conjunction with the S9A enquiry. The S9A enquiry appears in function VIEW COMPLIANCE SUMMARY on the SA record but not the S7 failure for the same tax year. In this case you do not need to note the S7 failure on the SA record. If you open a S9A enquiry in a failure to notify case then on concluding your enquiry

  • Follow the Action Guide ‘S9A: contract settlement’ (SAM31042) or ‘S9A: non-contract settlement’ (SAM31043)