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HMRC internal manual

Self Assessment Manual

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HM Revenue & Customs
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Interest, penalties and surcharge: surcharge: appeals against surcharge

This guidance applies to 2009-10 and earlier. Different rules apply to 2010-11 and later tax years. Guidance regarding tax years 2010-11 onwards can be found under SAM61200 onwards.

The taxpayer may appeal against a surcharge but must do so within 30 days from the date of the notice, that is within 35 days of the date on which the surcharge was imposed as shown on the SA record.

Note: Five extra days, over and above the 30 days described in the legislation, are allowed for payment and appeal against surcharge. The extra days take account of the delay between raising a surcharge and the expected or deemed date of issue of the surcharge notice. For this reason the date surcharge was imposed as shown on the SA record, and the date of issue of the surcharge notice, differ.

In general the normal appeals procedures apply. Where the taxpayer makes a late appeal, see business area ‘Appeals’ (SAM10000). Where you receive an appeal against surcharge on the grounds that a TTP arrangement is in place for the liability see SAM62060.

This subject only covers appeals on the grounds that there was a reasonable excuse for not paying the tax on time. The reasonable excuse must have existed throughout the whole of the period of default and it follows therefore that payment should have been made promptly once the reasonable excuse ended. Insufficient funds to pay the tax will not be regarded as a reasonable excuse. There is no formal definition of reasonable excuse. The SA353 which accompanies the surcharge notice gives guidance to taxpayers on what is likely to be accepted as a reasonable excuse. If you receive an appeal on any other grounds see the business area ‘Appeals’.

Note: Surcharges may occur through reallocation of payments, whether clerical or automatic. An example of the latter is where an assessment is increased in an enquiry case and payments made against a later year are automatically reallocated. Where it is clear for which year the payments were intended then reallocate back to that year. But consider the implications particularly as regards interest (if the rate of interest is higher than the surcharge rate it may not be in the taxpayer’s best interests to do so).

If a payment is reallocated clerically consider all implications of the move for example will it give rise to an interest charge or surcharge as a result.

Most appeals against surcharge will be received by the office with processing responsibility for the taxpayer. Some will be received by the office with technical responsibility for the taxpayer. Where an appeal is received by any other office the appeal should be acknowledged and then referred immediately to the office with processing responsibility for the taxpayer. For more information about receipt and logging of appeals see business area ‘Appeals’.

The office with processing responsibility should consider the appeal critically on the grounds of reasonable excuse and take one of the following actions

  • Allow the appeal
  • Resist the appeal

Or

  • Refer the case to the Debt Management and Banking Interest Review Unit (IRU) for advice(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)

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

Notes: 

1. When the office with processing responsibility considers an appeal against surcharge it should be based solely on the existence or otherwise of a reasonable excuse. Resourcing factors and cost-effectiveness are not valid factors in this consideration and must not be taken into account
   
2. Particular care will need to be taken when dealing with an appeal against surcharge where the underlying tax is unpaid.
3. Where an appeal is received and payment (of the tax) has not been made
  * If the underlying tax is in dispute
*   * Accept the appeal and informally standover the penalty
  * If the reasonable excuse is claimed or the appeal has been made for other reasons
  * Advise the taxpayer that the appeal cannot be dealt with until the tax is paid
  * Ask the taxpayer to pay the tax or withdraw the appeal