Tax Returns

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Discussion

matrignano

Original Poster:

4,344 posts

209 months

Friday 21st March 2014
quotequote all
I'm in for a £3k+ fine, but I'm questioning whether HMRC has behaved ethically and whether the quantum of the fine is justified.

Background: I'm an ignorant foreigner and wasn't aware you have to file a tax return when you earn > £100k as an employee who pays tax via PAYE. I have no savings outside of ISAs, nothing that generates capital gains, no other income etc., so I never thought I had to file a return.

I've been earning >£100k for the last 3 tax years: 2010/2011, 2011/2012 and 2012/2013.

Never heard anything from HMRC asking me to file a return or telling me I was late in filing one.

That's until 18 Feb 2014, when I'm fined £100 for failing to submit the 2012/2013 return.
I call HMRC to ask what's going on, and on the phone I'm told that, actually, I'm also late for the 2 previous tax returns.
Fast forward to today, when I recieved a nice bill of £3k+ for 3 years' worth of late filing penalties and interest.

My questions are:
- wasn't HMRC supposed to notify me each year that I was due to file a return? they failed to do that for 3 years straight
- didn't HMRC have a duty of care to notify me ASAP when I failed to file my first (and 2x subsequent) tax return(s)? Rather than sit on it for 3 years and then have the cheek to ask for thousands of £££ for late payment penalties?

What are my options now?
- Pay and shut up?
- Pay and appeal?
- Do not pay and appeal?
- Appeal by myself or via a lawyer?

Edited by matrignano on Friday 21st March 13:26

PurpleMoonlight

22,362 posts

156 months

Friday 21st March 2014
quotequote all
Do not pay and appeal.

They will likely reject and you will have to go to 1st tier tribunal.

I agree they should have issued a penalty the first time you failed to file, and that would have warned you it was necessary.

However, I can tell you that the 2nd tier tribunal have found that HMRC are not obliged to issue reminders or penalties until they choose to do so. This was in relation to employer annual PAYE returns though, and not individual taxation.


Red Devil

13,055 posts

207 months

Friday 21st March 2014
quotequote all
OP - >100k p.a. means you're subject to the higher rate of tax. Have you had a PAYE code notification for each of those tax years? If so, are they correct? It is possible that they aren't and your employer has therefore been deducting the wrong amounts under PAYE. Has HMRC explained how they have calculated the interest charge? (I assume they have done so on the basis of an assessment as you haven't submitted any returns).

You're stuck with the late filing penalties but any assessment can be appealed. You don't need a lawyer (if you need help from a professional it will be a tax accountant). However your first priority must be to establish what tax you actually should have paid and submit the relevant returns. The sooner you do this the better. If HMRC have assessed you and it is less than what you really owe you will be facing a further daily interest penalty.

matrignano

Original Poster:

4,344 posts

209 months

Friday 21st March 2014
quotequote all
Red Devil said:
OP - >100k p.a. means you're subject to the higher rate of tax. Have you had a PAYE code notification for each of those tax years? If so, are they correct? It is possible that they aren't and your employer has therefore been deducting the wrong amounts under PAYE. Has HMRC explained how they have calculated the interest charge? (I assume they have done so on the basis of an assessment as you haven't submitted any returns).

You're stuck with the late filing penalties but any assessment can be appealed. You don't need a lawyer (if you need help from a professional it will be a tax accountant). However your first priority must be to establish what tax you actually should have paid and submit the relevant returns. The sooner you do this the better. If HMRC have assessed you and it is less than what you really owe you will be facing a further daily interest penalty.
Err, doesn't the higher tax rate apply > £150k?

Eric Mc

121,773 posts

264 months

Friday 21st March 2014
quotequote all
Have HMRC stated categorically that they had issued you with a Notice to Complete a Self Assessment Tax return for each of the earlier years?


matrignano

Original Poster:

4,344 posts

209 months

Saturday 22nd March 2014
quotequote all
Eric Mc said:
Have HMRC stated categorically that they had issued you with a Notice to Complete a Self Assessment Tax return for each of the earlier years?
No.
They haven't stated anything in fact.

Eric Mc

121,773 posts

264 months

Saturday 22nd March 2014
quotequote all
If you were not legally obliged to complete a Self Assessment tax return, they can't fine you for not submitting one.

However, it is up to you to know whether you have a legal obligation to submit a return or not.

On what grounds are they stating now that you should have completed a return? In other words, what is the exact wording they are stating in their penalty notice?

Sir Bagalot

6,463 posts

180 months

Saturday 22nd March 2014
quotequote all
To be honest if you're smart enough to be earning £100K pa then you should also be smart enough to assume you should be completing Tax Returns.

Is the fine purely for not completing a TA? If memory serves me right if you owe less that £100 per tax year then they can't actually fine you.

You sure you don't have any interest earned outside ISA's? What about Gift Aid payments?

Eric Mc

121,773 posts

264 months

Saturday 22nd March 2014
quotequote all
Sir Bagalot said:
Is the fine purely for not completing a TA? If memory serves me right if you owe less that £100 per tax year then they can't actually fine you.
That is not the case any more. They will fine you for submitting a tax return late whether you owe tax or not.

Ozzie Osmond

21,189 posts

245 months

Sunday 23rd March 2014
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Eric Mc said:
it is up to you to know whether you have a legal obligation to submit a return or not.
This is the crunch - it's up to you to declare your earnings/income, HMRC has no way of knowing what you've got.

Unless Eric MC has guidance to the contrary, my advice is to pay the penalty as fast as possible otherwise interest will keep running and what you owe just keeps increasing. You can argue your corner afterwards.

I imagine you've already realised this is just the start of your problems. Once you declare your earnings/income they will be assessed to tax and interest as well, with the possibility of a penalty being added. Again, the faster you move the smaller the interest charge will be. If you can guess what you owe than pay that NOW, telling HMRC it's an estimate. This will at least "stop the clock" on that sum.

Jockman

17,912 posts

159 months

Sunday 23rd March 2014
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Perhaps deposit £10k in your HMRC account then argue your case thereafter??

At least you'll stop the 3% interest and start earning 0.5% interest on the undisputed amount??

Remember to declare the interest on your next tax return, Guido. biggrin

matrignano

Original Poster:

4,344 posts

209 months

Sunday 23rd March 2014
quotequote all
Time to get an accountant hehe

matrignano

Original Poster:

4,344 posts

209 months

Tuesday 8th April 2014
quotequote all
So, it appears HMRC might have been sending statements, notices and reminders to a 4+ years old address of mine.
For some reason, they only updated their records in Feb 2014 and that's when I started receiving their letters.

Googled it but can't find a definite answer: should have HMRC updated my address via the PAYE/NI records which show the correct address? Or was the onus on me to notify them of the change of address?

In other words, can I seek recourse on the basis that they have been sending all these letters to the wrong address for years?

Eric Mc

121,773 posts

264 months

Tuesday 8th April 2014
quotequote all
Onus is on you.

Maxf

8,402 posts

240 months

Tuesday 8th April 2014
quotequote all
Thread hijack - apologies.

I sold some (non-UK) shares, which took me over the 2012/13 CGT limit. Ive never sold any before and am on straightforward PAYE at work.

Like an idiot, I forgot about these until someone mentioned it. Like a good citizen I wrote to the tax office to confess, with my calculations of the amount due and asking how to pay (I've never done self assessment).

Am I going to get hit with a huge fine, or as they wouldnt have known about the shares if I hadn't have confessed, are they likely to be somewhat lenient?

Eric Mc

121,773 posts

264 months

Tuesday 8th April 2014
quotequote all
On what date were the shares sold?

Maxf

8,402 posts

240 months

Tuesday 8th April 2014
quotequote all
Eric Mc said:
On what date were the shares sold?
May 2012

Eric Mc

121,773 posts

264 months

Tuesday 8th April 2014
quotequote all
That implies you should have completed a 2012/13 self assessment tax return. The 2012/13 tax return had a statutory filing deadline date of 31 January 2014 so you are technically over 2 months late in filing a 2012/13 tax return.

However, if you have formally notified HMRC that you need to complete a 2012/13 tax return NOW, they MAY give you a 90 day window from the date you notified them to get the return in without incurring a penalty. You will need to move quickly on this. The first thing you need is a Self Assessment Unique Tax Reference (known as the UTR) as you can only submit a Self Assessment tax return when you have that number. If you haven't formally asked for that number, I would do it now.

If it turns out that you have a tax liability arising for 2012/13, the due date for paying that tax bill was also 31 January 2014. So, by the time you know what the liability is and have paid it, three months or more will probably have passed, so HMRC will also charge interest on the late tax payment.

My advice would be to get moving on this quickly and try and get a return submitted within one month from now.

Maxf

8,402 posts

240 months

Tuesday 8th April 2014
quotequote all
Thanks Eric.

I've written to them (last week) to inform them, so will chase it up in a few days when hopefully they will know what I'm talking about.

Is self assessment for a tax novice pretty straightforward? I have reasonable records of my affairs for 2012/13, I think.



matrignano

Original Poster:

4,344 posts

209 months

Tuesday 8th April 2014
quotequote all
Eric Mc said:
Onus is on you.
So how did they manage to find my correct address after all these years? And why did it take them so long?