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HMRC internal manual

Self Assessment Manual

From
HM Revenue & Customs
Updated
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Interest, penalties and surcharge: penalties: time to pay (TTP) and late payment penalties

No late payment penalties are imposed if a taxpayer makes proposals which lead to an acceptable Time To Pay (TTP) arrangement to fully settle the liability on, or before ,30 days of the due date (that is before the first late payment penalty trigger date, see SAM61390).

Proposals made after the first late payment penalty trigger date but by 30 days plus 5 months from the due date, can avoid only the second and third late payment penalties. Similarly, proposals made after the second late payment trigger date but by 30 days plus 11 months from the due date, can avoid only the third late payment penalty. This also applies to any arrangement made as a result of enforcement action, particularly court proceedings.

Warning: To avoid late payment penalties being raised when TTP was agreed on or before any of the trigger dates, the start and end dated of a TTP arrangement must be correctly entered on the SA record. But, if a subsequent arrangement is agreed for a following year and TTP start and end dates are already on SA for a previous arrangement, you must not change the start date in SA as this may trigger a late payment penalty in error for an earlier year.

This is in itself may cause problems, for example, where proposals for payment of a second or subsequent year are received after the late payment trigger date(s) for that year and the taxpayer is correctly liable for late payment penalties. Where there is an existing TTP start date on SA, this may prevent these penalties from being raised. As you cannot change the start date of the TTP, you will need to raise a miscellaneous penalty charge using the function CREATE SUNDRY CHARGE in these circumstances. For more information, see subject ‘Manually raising a penalty’ at SAM61280 and the Action Guide at SAM61281.

You will find full details of the TTP procedures and the implications for late payment penalties in the Debt Management and Banking Manual (DMBM).

Appeals against late payment penalties where TTP arrangement in place

If a TTP arrangement has been agreed, a start and end date will populate the TTP fields on the ‘Individual Signals’ screen on the SA record. You should check SA Notes to establish which year(s) the TTP arrangement refers to.

Where you receive an appeal against a late payment penalty on the grounds that HMRC agreed TTP prior to the trigger date, you must check SA Notes to establish that

  • The payment proposals were made on, or before, the late payment penalty trigger date
  • HMRC agreed the TTP arrangement
  • The customer is keeping to the TTP arrangement

Then follow the guidance below depending on the scenario you are dealing with

Scenario Action
   
Where it is clear that the arrangement was agreed on, or before, the late payment penalty trigger date, and the customer is keeping to the arrangement Refer the appeal to DMB
Where it is clear that the arrangement was agreed on, or before, a late payment penalty trigger date, and the arrangement has been cancelled because the customer defaulted Reject the appeal (do not send the case to DMB)
Where SA Notes indicate the TTP was agreed after the late payment penalty trigger date and the customer is not claiming they were misled about the late payment penalty If there are no grounds for reasonable excuse, reject the appeal (do not send the case to DMB). If the grounds of appeal show reasonable excuse, or possible reasonable excuse, then the penalty should be informally stood over until the TTP arrangement has completed. The appeal should then be considered further at that stage, dependent on whether the TTP was completed successfully or not.
Where the customer claims the late payment penalty has resulted because the TTP was inappropriately cancelled Refer the appeal to DMB.
Where the customer claims that TTP has been agreed but there is no supporting evidence Refer the appeal to DMB (after obtaining as much detail as possible from the customer)

If you are in any doubt about the validity of the late payment penalty, where a TTP arrangement is in place, or an arrangement has been cancelled, you should contact DMB TTPMO for advice as detailed on the DMB contacts page.

When DMB accept an appeal against a late payment penalty on the grounds that a TTP arrangement was agreed before the late payment penalty trigger date, you do not need to take any further action. DMB will contact the customer and stand over the penalty. If the arrangement defaults, DMB will release the penalty for collection. If the arrangement completed successfully, DMB will cancel the penalty.

For further information on submitting the appeal to Debt Management and Banking, follow the Action Guide at SAM61381.

For further information on rejecting an appeal, follow the Action Guide at SAM61382.