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HMRC internal manual

Self Assessment Manual

From
HM Revenue & Customs
Updated
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Interest, penalties and surcharge: penalties: clerically raising penalties for years prior to CY-4

From April 2012, the system will automatically impose penalties for a maximum of four ‘in-date’ tax return years, for example in 2014-15, the system can still automatically apply a penalty for a late 2010-11 tax return. However, there may be some situations where a penalty is due for a tax year prior to CY-4 and you will need to raise these clerically. For example

  • For a return issued when the return year is CY-4, for example a 2010-11 tax return issued in 2014-15. Dependent on when the return was issued during 2014-15, some penalties may have been issued but not all. You will need to review the penalty position and manually raise any that fall outside the automatic period
  • A determination made for the return year CY-4 or earlier, for example a 2010-11 determination made in 2014-15
  • A return received, for example in response to the issue of a determination when the year of the return is CY-5 or earlier
  • Where there is a change to the liability, for example following an ‘in-time’ claim to relief or amendment when the return year is CY-5 or earlier
  • Where an informal or formal standover against a penalty is released and the return year is prior to CY-4
  • Where a customer’s address(s) was RLS and a new address has been found and penalties need to be charged for a tax year prior to CY-4

These types of cases are unusual, but when the penalties arise you will need to apply penalty charges clerically by creating a miscellaneous penalty charge, using function CREATE SUNDRY CHARGE. You will need to create separate miscellaneous penalty charges for each different penalty charge due. Note: You may also need to consider manually issuing daily penalty reminders if daily penalties are accruing and a notice of penalty assessment has not been issued.

For example

  • 2010-11 tax return issued on 03/02/2015
  • Return due date is 10/05/2015 (3 months and 7 days from the date of issue)
  • Return received 18/08/2015

The customer should be charged £100 late filing fixed penalty and £80 daily penalty. Daily penalties start to accrue on 11/08/2015 (3 months after the return due date) so the charge is £10 per day x 8 days = £80.

The system cannot automatically apply penalties for 2010-11 in the tax year 2015-16 so you will need to apply the penalty charges clerically by creating a miscellaneous penalty using function CREATE SUNDRY CHARGE. Separate charges will need to be created in this case for the £100 late filing fixed penalty and £80 daily penalty.

For information on how to raise and amend manual penalties, see subject ‘Manually raising a penalty’ (Action Guide) (SAM61281).

More information about the time limits for the issue of returns can be found at SAM121080.

More information about the different penalties that may be charged can be found at SAM61200 onwards.