Debt and return pursuit: overview: revenue determinations
An SA taxpayer is required to file a return by the filing date. When a taxpayer fails to meet this obligation HMRC has the power to raise a Revenue Determination of the liability due and unpaid.
The purpose of a Revenue Determination is to encourage the taxpayer to file the return by raising a charge (Revenue Determination) on the taxpayer’s record, sufficient to prompt the taxpayer to file the return and pay what is due, or contact us for help.
From January 2006, SA into IDMS (Integrated Debt Management System) automated the determination process. IDMS automatically requested the SA computer system to raise a determination where a return(s) remains outstanding despite
- Contact by the Debt Management Telephone Centre (DMTC) or the Debt Technical Office (DTO) where a return may have been promised
- The issue of a return reminder letter IDMS509
From Summer 2009, IDMS sorts work items in accordance with the ‘return campaign’ requirements and either
- Issues an IDMS99 debt/return reminder automatic letter
- Passes to Debt Management Telephone Centre (DMTC) for a phone call
- Passes to the associated campaigns Debt Technical Office for clerical review
Where returns remain outstanding DMB review selected cases and where appropriate, either raise a manually calculated determination, or request IDMS to pass the case to the SA computer system to automatically raise a determination. This is based on
- The previous year’s liability shown on the taxpayer’s record
- (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
- A specific calculation for PAYE taxpayers
From the 2015-2016 tax year onwards, SA will collect Class 2 NICS as part of the Balancing Charge. the determination functionality will not be updated for this change.
Cases not suitable for an automatic Revenue Determination
Some cases are not suitable for an automatically calculated Revenue Determination where certain signals or conditions apply.
When a Revenue Determination has been requested
An automatic Action History note will be posted on IDMS to show that a determination has been requested against each appropriate work item(s).
The SA computer system will raise the determination(s) and any payments on account (POA) for the following year overnight and send the determination work item(s) to IDMS. An automatic SA Note showing the request came from IDMS together with the return year(s) is made.
View Revenue Determination
To view a Revenue Determination after it has been created on SA, use SA function VIEW REVENUE DETERMINATION - accessed from function MAINTAIN RETURN SUMMARY.
Once a Revenue Determination charge has been added to the taxpayer’s SA record, a notice form SA323 ‘Determination of tax due’ will be issued to the taxpayer. A copy will be issued to the taxpayer’s agent where the 64-8 signal is present on the record. Also where a Revenue Determination is raised it will automatically set the level of any POA for the following year.
The taxpayer statement will show the amount of the Revenue Determination less any POA already paid for that year. A statement is not a pre requisite to enforcement and there is no requirement to wait until the next statement is issued before pre-enforcement activity, such as a letter. If POA have previously been reduced following a claim to adjust, these will be restored when a determination is made for the same year.
Claim to reduce payments on account
A claim to reduce POA cannot be made against a determination but a claim to reduce can be made against the POA created for the following year if the return for that year is not overdue.
Where the Revenue Determination and any overdue POA remain unpaid, interest and surcharge will be added to the taxpayer’s record.
Right of appeal
There is no right of appeal against a Revenue Determination. But submission of the return will supersede the Revenue Determination and the determined amount of tax will be automatically amended to the return amount, providing the return is received within the time limits.
Any related interest, surcharge and POA will also be automatically amended.
What is the time limit for raising a Determination?
Up to and including 31 March 2010 determinations could be raised within 5 years from the filing date.
From 1 April 2010, determinations should only be raised within 3 years from the filing date.
Once a Revenue Determination has been raised the taxpayer must be given 30 days in which to file the return before any enforcement action is taken, such as Distraint or County Court action. Allowing the taxpayer 30 days to send in the return is DMB policy however this is not a legislative requirement.
Determinations and penalties
Up to 5 April 2012, generally, the first fixed automatic penalty (FAP1) will have been automatically raised before a determination is raised. Whilst it was not a legal requirement to issue a FAP1 before a determination is raised, it would only be in exceptional circumstances that a determination would be raised before the FAP1. The raising of FAP and determinations are independent from each other.
However, from 6 April 2012, there is no longer a requirement for a fixed automatic penalty to be present before a determination is raised. This applies to all tax years from 6 April 2012.
Both a Revenue Determination and daily penalties can be applied to the same taxpayer for the same year and raising a determination between penalties will not prevent future penalties being raised.
Detailed information on Revenue Determinations is in the Debt Management & Banking Manual (DMBM518000).
For more information about IDMS and Revenue Determinations, please refer to the IDMS site on the Intranet and the IDMS User Guide.