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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: time to pay and 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.

Surcharge (both initial and further) is not imposed if a taxpayer makes proposals which lead to an acceptable arrangement to pay the full liability within 28 days of the due date, that is before the surcharge trigger date (SAM62080). If proposals are made after the 28 day period but before six months of the due date the taxpayer may only avoid further surcharge.

This concession also applies to any arrangement made as a result of enforcement action, particularly court proceedings.

Warning: You should note the start and end dates of any arrangement on the SA record. But if you then agree an arrangement for a following year, keep the start date for the previous year. If you change the start date a surcharge may be raised for one or more of the earlier years.

But this in itself may cause problems. For example, where proposals for payment for a second or subsequent year are received after the surcharge trigger date for that year and the taxpayer is correctly liable for surcharge. If you amend the start date on the record then a surcharge will be incorrectly raised for the earlier year(s). You should use the function APPLY SURCHARGE to impose a surcharge in such circumstances.

You will find full details of the Time to Pay procedures and the implications for surcharge in the Debt Management & Banking Manual (DMBM).

Appeals against surcharge where TTP arrangement in place

Where you receive an appeal against a surcharge from a customer on the grounds that they have a TTP arrangement in place for the liability, you should view the SA record to confirm whether the customer meets the following criteria

  • Payment proposals were made on or before the surcharge trigger date
  • HMRC agreed the TTP arrangement
  • The customer is keeping to the TTP arrangement

If a TTP arrangement has been agreed and set up correctly, there will be a start and end date entered in the TTP fields on the ‘Individuals Signals’ screen on the SA record. You should check SA Notes to establish that the TTP arrangement refers to the current year liability.

Where you establish that the TTP arrangement started on or before the surcharge trigger date

  • Make the following SA Note ‘TTP agreed before surcharge trigger date, appeal referred to DMB’ 
  • Send an e-mail to your Debt Pursuit Office contact headed ‘TTP - SA surcharge appeal case’ and include the following details 

    • Customer name
    • UTR
    • The recovery office number from the ‘Maintain Responsible Office’ screen
    • TTP end date

Where you establish that the TTP arrangement started after the surcharge trigger date or there is no start and/or end date in the TTP fields

  • Check SA Notes for any note confirming that a TTP arrangement has been agreed and when the proposals were first made in relation to the surcharge trigger date

If there is no note confirming a TTP arrangement was agreed before the surcharge trigger date

  • Make the following SA Note ‘TTP agreed before surcharge trigger date, appeal referred to DMB’
  • Where there is no start date shown in the TTP field, set the PCA signal
  • Send an e-mail to your Debt Pursuit Office contact headed, ‘TTP - SA surcharge appeal case’ and include the following details

    • Customer’s name
    • UTR
    • The recovery office number from the ‘Maintain Responsible Office’ screen

If there is a note advising that a TTP arrangement was agreed after the surcharge trigger date, you should look at the reason for appeal. If the grounds for appeal are that the customer claims they were led to believe when the TTP was agreed that a surcharge would not be imposed, you should

  • Accept this as a reasonable excuse
  • Accept the appeal
  • Follow the guidance at SAM62021 and cancel the surcharge

Where the customer is not claiming that they have been misled by previous guidance given and their only grounds for appeal is that they now have an agreed TTP arrangement, you should not accept this as a reasonable excuse but you should consider the appeal against the surcharge in accordance with existing guidance at SAM62021.

If there is no SA Note regarding an agreed TTP arrangement, you should

  • Make the following SA Note ’TTP not recorded, appeal referred to DMB’ 
  • Send an e-mail to your Debt Pursuit Office contact headed ‘TTP - SA surcharge appeal - no notes’ and include the following details

    • Customer’s name
    • UTR
    • The recovery office number from the Maintain Responsible Office screen

Following submission to DMB of an appeal against a surcharge on the grounds of a TTP arrangement, you are not required to take any further action. DMB will contact the customer and standover or cancel the surcharge, if appropriate.